1. The inflation rate in the U.S. is 2%, while the inflation rate in Japan is 10%. The current exchange rate for the Japanese yen (¥) is $0.0092. After supply and demand for the Japanese yen has adjusted in the manner suggested by purchasing power parity, the new exchange rate for the yen will be:
$0.0099.
$0.0085.
$0.0082.
$0.0096.
2. TJ Max, Inc., a U.S.-based MNC, will need 30 million Thai baht on June 25. It is now March 25. TJ Max has negotiated a non-deliverable forward contract with its bank. The reference rate is the baht's closing exchange rate (in $) quoted by Thailand's central bank in 90 days. The baht's spot rate today is $.023. If the rate quoted by Thailand's central bank on June 25 is $.020, Procter & Gamble will ____ $____.
- pay; 9,000
-be paid; 9,000
-pay; 90,000
-be paid; 90,000