If exchange rates are allowed to fluctuate freely and the US demand for Japanese yen increases which of the following will happen?
a. the US balance of trade deficit will worsen in the long run
b. Americans will have to pay more for Japanese goods
c. It will be more expensive for the Japanese to buy American real estate
d. the dollar will appreciate
e. more Americans will want to travel to Japan
Ans: b. Americans will have to pay more for Japanese goods
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