Answer (B) is correct . Increased demand for Japanese goods in the U.S. would increase the demand for yen, reflected in a rightward shift of the demand curve for yen. U.S. purchasers are willing to pay more for any given quantity of yen.
Answer (A) is incorrect because An increase in incomes in Japan would result in increased consumption of imports and increased demand for foreign currencies. The result would be downward pressure on the yen.
Answer (C) is incorrect because A decrease in U.S. incomes would reduce the demand for imports, which would decrease demand for foreign currencies.
Answer (D) is incorrect because An increased demand for U.S. goods in Japan would increase the supply of yen, thereby creating pressure for the yen to depreciate.
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