Early in September 1983, it took 245 Japanese yen to equal $1. Nearly 25 years later, in

Question:

Early in September 1983, it took 245 Japanese yen to equal $1. Nearly 25 years later, in May 2008, that exchange rate had fallen to 103.5 yen to $1. Assume that the price of a Japanese-manufactured automobile was $9,000 in September 1983 and that its price changes were in direct relation to exchange rates.

a. Has the price, in dollars, of the automobile increased or decreased during the 25-year period because of changes in the exchange rate?

b. What would the dollar price of the automobile be in May 2008, again assuming that the car’s price changes only with exchange rates?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...