As Japan ___ its budget deficits and ___ its dependence on debt, the Japanese currency, JPY, would ___ in value against other currencies.

As Japan ___ its budget deficits and ___ its dependence on debt, the Japanese currency, JPY, would ___ in value against other currencies.
A . Reduces, reduces, appreciate
B . Reduces, reduces, depreciate
C . Increases, reduces, appreciate
D . Reduces, increases, depreciate

View Answer

Answer: A

Explanation:

When a country reduces its budget deficits and lowers its dependence on debt, it generally strengthens its fiscal position. This can lead to increased investor confidence and higher demand for the country’s currency. In Japan’s case, if it reduces its budget deficits and its dependence on debt, the Japanese yen (JPY) would likely appreciate in value against other currencies. This appreciation occurs because a stronger fiscal position reduces the risk of inflation and debt defaults, making the currency more attractive to investors.