A bundle of goods in Japan costs 2,532,600 while the same goods and services cost $19,800...

 

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A bundle of goods in Japan costs ¥2,532,600 while the same goods and services cost $19,800 in the United States. a. If purchasing power parity holds, what is the current exchange rate of U.S. dollars for yen? b. If, over the next year, inflation is 9 percent in Japan and 4 percent in the United States, what will the goods cost next year? c. Will the dollar depreciate or appreciate relative to the yen over this time period? A bundle of goods in Japan costs ¥2,532,600 while the same goods and services cost $19,800 in the United States. a. If purchasing power parity holds, what is the current exchange rate of U.S. dollars for yen? b. If, over the next year, inflation is 9 percent in Japan and 4 percent in the United States, what will the goods cost next year? c. Will the dollar depreciate or appreciate relative to the yen over this time period?

Answer rating: 100% (QA)

a Exchange Rate Calculation To calculate the exchange rate using purchasing power parity PPP we can ... View the full answer