A bundle of goods in Japan costs ¥2,065,300 while the same goods and services cost $24,100 in the United States.
a. If purchasing power parity holds, what is the current exchange rate of U.S. dollars for yen? (Round your answer to 4 decimal places. (e.g., 32.1616))
Current exchange rate $ per yen
b. If, over the next year, inflation is 7 percent in Japan and 5 percent in the United States, what will the goods cost next year?
Cost of Goods
Japan ¥
United States $
c. Will the dollar depreciate or appreciate relative to the yen over this time period?
Appreciate
Depreciate