On January 1, the U.S. dollar: Japanese yen exchange rate is $1 = 250. During the year,

Question:

On January 1, the U.S. dollar: Japanese yen exchange rate is $1 = ¥250. During the year, U.S. inflation is 4% and Japanese inflation is 2%. On December 31, the exchange rate is $1 = ¥235. What are the likely competitive effects of this exchange rate change on Caterpillar Tractor, the American earth‑moving manufacturer, whose toughest competitor is Japan's Komatsu?

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...