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If US inflation is lower than Japanese inflation Foreign imports from the US will decrease US...

If US inflation is lower than Japanese inflation

Foreign imports from the US will decrease

US imports from Japan will decrease

US Balance of Trade with Japan will decrease

US trade deficit with Japan will increase

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Answer #1

If the United States inflation is lower than the Japanese inflation,it will mean that United States dollar will be having a stronger representation than the Japanese Yen, and hence United States trade deficit with Japan will be increasing because United States currency will be higher and it will mean that the import of Japan from United States will be lower and hence it would lead to increase in the trade deficit of America with Japan.

Foreign import will be not decreasing from United States because it is not related to whole world currency it is just Japanese currency and all the other statement are in complete contrast.

Correct answer will be option (d) United States trade deficit with Japan will be increasing.

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