chapter 9

Purchasing Power Parity Forecasts. Use the table containing economic, financial, and business indicators to answer the following questions. Assuming purchasing power parity, and assuming that the forecasted change in consumer prices is a good proxy of predicted inflation, forecast the following exchange rates: a. Japanese yen/U.S. dollar in one year b. Japanese yen/Australian dollar in one year c. Australian dollar/U.S. dollar in one year Forecasting the Pan-Pacific Pyramid: Australia, Japan, and the United States Industrial Production Unemployment Rate Gross Domestic Product Forecast 2015e Country Latest Qtr Latest Recent Qtr 4.9 % Australia Forecast 2016e 3.1% 2.1% 2.2% 4.5% -1.7 % 4.1 % Japan United States 2.2% Consumer Prices Interest Rates 3-month 1-yr Govt Country Year Ago Latest Latest Latest Australia Forecast 2015e 2.9% 0.0 % 3.2% 2.5% -0.2% 2.1% Japan United States 6.78 % 0.72 % 4.66 % 6.21 % 1.68 % 4.58 % Trade Balance Current Units (per US$) Last 12 mos (billion $) Country Oct 17th Current Account Last 12 mos Forecast 15 (billion $) (% of GDP) -46.5 -5.5% 197.7 -793.1 Australia -12.8 Year Ago 1.39 121.00 1.00 Japan 1.11 117.00 1.00 98.2 -810.2 United States Purchasing Power Parity Forecasts. Use the table containing economic, financial, and business indicators to answer the following questions. Assuming purchasing power parity, and assuming that the forecasted change in consumer prices is a good proxy of predicted inflation, forecast the following exchange rates: a. Japanese yen/U.S. dollar in one year b. Japanese yen/Australian dollar in one year c. Australian dollar/U.S. dollar in one year Forecasting the Pan-Pacific Pyramid: Australia, Japan, and the United States Industrial Production Unemployment Rate Gross Domestic Product Forecast 2015e Country Latest Qtr Latest Recent Qtr 4.9 % Australia Forecast 2016e 3.1% 2.1% 2.2% 4.5% -1.7 % 4.1 % Japan United States 2.2% Consumer Prices Interest Rates 3-month 1-yr Govt Country Year Ago Latest Latest Latest Australia Forecast 2015e 2.9% 0.0 % 3.2% 2.5% -0.2% 2.1% Japan United States 6.78 % 0.72 % 4.66 % 6.21 % 1.68 % 4.58 % Trade Balance Current Units (per US$) Last 12 mos (billion $) Country Oct 17th Current Account Last 12 mos Forecast 15 (billion $) (% of GDP) -46.5 -5.5% 197.7 -793.1 Australia -12.8 Year Ago 1.39 121.00 1.00 Japan 1.11 117.00 1.00 98.2 -810.2 United States