The Economy of Japan Essay Example | Topics and Well Written Essays - 1000 words

The Economy of Japan - Essay ExampleExchange put in a floating regime are determined by the supply and penury for a that currency, if the gather up for a currency is high then the esteem of the currency provide appreciate against other currency, if demand for a currency falls and speculators sell the currency then the value of the currency depreciates against other currencies.This write up analyses the factors that have contributed to the fluctuations in the Japanese yen deepen rate, this factors include inflation, interest rates, unemployment takes, monetary policies, fiscal policies and take residuals and other factors.Inflation is the rise in prices of products in the entire preservation for a long degree of time, inflation is caused by attachd money supply or even an increase in the level of prices of inputs such as crude oil prices, there exist two types of inflation as Keynes depicted, the terms push and demand pull inflation, in Japan the level of inflation has r isen steadily and this sum that the local currency namely the Yen has appreciated over time against the other major currencies.Governments allow always try to balance inflation and unemployment levels, according to the Philips curve the... Unemployment butt be defined as the number of peck who are jobless in an economy it is calculated by dividing the number of people who are unemployed with the number of people who are termed as the work force in an economy it may also refer to a condition in which an economy has idle resources that are not being utilized.Today japans unemployment levels have declined to 4.0% since May this year, the highest recorded level of unemployment in Japan from 1953 because this is when the economy initiated records was 4.8%, unemployment can be reduced through the use of fiscal and monetary policy, unemployment has slightly gone down in Japan, this decline is as a result of increasing interest rates, when interest rates increase the court of borrowing capital rises and therefore less investment will occur in the economy and this will result into a decline in the employment rates. Therefore the decline in unemployment means that the exchange rate will appreciate.Interest ratesInterest rates are referred to as the cost of borrowed funds, a rise or drop in interest rates will affect the exchange rate of a countries currency, the interest rates are expected to rise according to the Japanese, when interest rates increase then the currency will appreciate, however if low interest rates exist in a country its currency will devalue. Today interest rates are rising and therefore the value of the yen is appreciating against the other major currencies, this is the reason why the Japanese yen has appreciated against the US sawbuck for the past two months as a result of rising interest rates. disdain balanceTrade balances occur when the level of exports do not balance with the value of imports, when there is a positive balance of trade wher eby exports exceed imports then