Last one... I've done so many that I'm simply mind-boggled as of now!
Until the early 1980's, Japan required its large insurance companies to invest all of their vast holdings in Japanese securities.
At the prompting of the U.S. , Japan relaxed the restrictions and allowed the companies to invest anywhere in the world.
What effect do you think this had on the yen/dollar exchange rate and the trade balance between the two countries?
Think it through and apply simply supply and demand. Draw a world market for yen in terms of dollars. That is, put dollars on the Y-axis, yen on the X-axis, and draw supply and demand curves. Draw another world market for dollars in terms of yen. The relaxed restrictions means that the demand for yen falls. Shift the demand for yen inwards. It also implies and increase in demand for dollars -- in the dollars market. Shift outward the demand for dollars. (Similarly, the demand for Euros, English Pounds, etc. would also increase.)
Now then, say a japanese widget costs 100,000 yen. With the change, the price of yen falls. How will U.S. consumers respond; the number of dollars that it took to buy 100,000 yen suddenly fell.
Take it from here.