Assume that the export price of a Toyota Corolla from? Osaka, Japan is ?¥2 200,000. The exchange rate is ?¥87.58?/$. The forecast rate of inflation in the United States is 2.2?% per year and is 0.0?% per year in Japan. Use this data to answer the following questions on exchange rate? pass-through.
a. What was the export price for the Corolla at the beginning of the year expressed in U.S.? dollars?
b. Assuming purchasing power parity? holds, what should the exchange rate be at the end of the? year?
c. Assuming? 100% pass-through of exchange? rate, what will be the dollar price of a Corolla at the end of the? year?
d. Assuming? 75% pass-through, what will be the dollar price of a Corolla at the end of the? year?