Question

exchange rate for japanese yen
what caused the change in the yens exchange rate?
how has the yens exchange rate changed?
options: demand decreased, demand increased, supply decreased
(chart: supply (s) and two demand curves d₁, d₂; exchange rate (er) axis, demand for yen axis)

Explanation:

Step1: Analyze the Graph

The graph shows the demand for Japanese Yen. The demand curve shifts from \( D_1 \) to \( D_2 \), which is a rightward shift. A rightward shift in the demand curve indicates an increase in demand.

Step2: Relate to Exchange Rate Change

The exchange rate (ER) changes from \( ER_1 \) to \( ER_2 \), which is a decrease (since the horizontal axis is "Exchange Rate" and moving from \( ER_1 \) to \( ER_2 \) is a rightward/downward movement in typical exchange rate graphs where lower exchange rate means the currency (Yen here) is less valuable or the exchange rate (e.g., USD per Yen) has decreased). But the question is about what caused the change in the Yen's exchange rate. The shift in demand is to the right, so demand increased. Wait, but the options: Wait, the first part of the question (maybe a dropdown) and then the options. Wait, the options given are "Demand decreased", "Demand increased", "Supply decreased". From the graph, the demand curve shifts right (from \( D_1 \) to \( D_2 \)), so demand increased. Wait, but the exchange rate: if demand for Yen increases, what happens to the exchange rate? Wait, maybe the vertical axis is "Exchange Rate (e.g., USD per Yen)" and horizontal is "Quantity of Yen". Wait, no, the graph's vertical axis is "Exchange Rate for Japanese Yen" (maybe Yen per USD, so lower exchange rate means Yen is stronger? Wait, maybe I got the axes reversed. Let's re-express: In exchange rate graphs, usually, the vertical axis is the exchange rate (e.g., price of Yen in terms of another currency, say USD), and horizontal is quantity of Yen. So demand for Yen: if demand increases (shift right), the equilibrium exchange rate (price of Yen) would increase (Yen appreciates). But in the graph, \( ER_1 \) to \( ER_2 \): if \( ER_2 \) is lower than \( ER_1 \), that would mean Yen depreciates. Wait, maybe the vertical axis is "Exchange Rate (USD per Yen)", so a lower exchange rate means more USD per Yen? No, wait, confusion. Alternatively, maybe the horizontal axis is "Exchange Rate" (e.g., Yen per USD), so higher exchange rate means more Yen per USD (Yen depreciates). Wait, this is getting confusing. But the key is the demand curve shift. The demand curve for Yen shifts right (from \( D_1 \) to \( D_2 \)), so demand for Yen increased. So the cause of the change in Yen's exchange rate is an increase in demand for Yen. Wait, but the options: the options are "Demand decreased", "Demand increased", "Supply decreased". So the correct option for what caused the change (the shift in demand) is "Demand increased".

Answer:

Demand increased