Let us consider a Utopian world in which there are only three goods: sake, beer, and TV

Question:

Let us consider a Utopian world in which there are only three goods: sake, beer, and TV sets.
■ Japanese consume only a locally produced food, called sake, and an industrially produced and traded good, called TV sets.
■ Americans consume only a locally produced food, called beer, and an industrially produced and traded good, called TV sets.
TV sets are produced in both countries and actively traded; their local prices follow the law of one price. Foods are produced only locally and are not traded. The consumption basket of a Japanese individual consists of two-thirds sake and one-third TV sets. The consumption basket of an American consists of one-half beer and one-half TV sets. Prices of beer and TV sets in the United States are constant over time in U.S. dollars. Japanese are very competitive and export a lot of TV sets. Japanese fanners want to share in the increased national wealth, and the price of sake is rising at a rate of 10 percent per year in yen. Assume that the yen/dollar stays constant.
a. What is the consumer price index inflation in Japan?
b. Does relative PPP hold between Japan and the United States?
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...