Yen Depreciation and Japanese Economy

Study Notes

円安 (Yen Depreciation)

Exchange Rates

Definition: 円安 (yen depreciation) refers to a decrease in the value of the Japanese yen relative to other currencies.
Causes:
- Increased money supply
- Higher inflation expectations
- Decreased demand for yen
Effects:
- Export boost: cheaper yen makes Japanese exports more competitive
- Import costs increase: more expensive imports lead to higher prices for Japanese consumers

Japanese Economy

Impact on Economy:
- Boost to export-led growth
- Increased revenue for Japanese companies with overseas operations
- Higher import costs lead to higher production costs and potential inflation
Monetary Policy: Bank of Japan's monetary easing policies can lead to yen depreciation
Fiscal Policy: Government spending and tax cuts can stimulate economy, but may lead to inflation and yen depreciation

International Trade

Trade Balance:
- Weaker yen makes Japanese exports more competitive, improving trade balance
- Import costs increase, potentially widening trade deficit
Trade Partners:
- Appreciation of trading partners' currencies (e.g., USD, EUR) makes Japanese exports more competitive
- Depreciation of trading partners' currencies (e.g., CNY) reduces competitiveness of Japanese exports
Global Economy:
- Yen depreciation can lead to increased global trade tensions and competitive devaluations
- Affects global commodity prices and inflation expectations

Description

This quiz assesses your understanding of the causes and effects of yen depreciation on the Japanese economy, including its impact on exports, imports, and international trade. Learn how monetary and fiscal policies affect the value of the yen and Japan's trade balance.