Assume that the export price of a Sony Smartphone from Naguya, Japan is VIS. The exchange rate is 87.60S. The forecast rate of inflation in the United States is 22% per year and is 1,5% 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 Sony Smartphone at the begianing 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? e. Assuming 100% pass-through of exehange rate, what will the dollar price of a Sony Smartphone be at the end of the year? nini d. Assuming 80% pass-through, what will the dollar price of a Sony Smartphone be at the end of the year?
Assume that the export price of a Sony Smartphone from Naguya, Japan is VIS. The exchange rate is 87.60S. The forecast rate of inflation in the United States is 22% per year and is 1,5% 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 Sony Smartphone at the begianing 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? e. Assuming 100% pass-through of exehange rate, what will the dollar price of a Sony Smartphone be at the end of the year? nini d. Assuming 80% pass-through, what will the dollar price of a Sony Smartphone be at the end of the year?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![Assume that the export price of a Sony Smartphone from Naguya, Japan is VIS. The
exchange rate is 87.60S. The forecast rate of inflation in the United States is 22% per
year and is 1,5% 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 Sony Smartphone at the begianing 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?
e. Assuming 100% pass-through of exehange rate, what will the dollar price of a Sony
Smartphone be at the end of the year?
nini
d. Assuming 80% pass-through, what will the dollar price of a Sony Smartphone be at
the end of the year?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6feb826c-5f18-485f-a673-30717b20663a%2F70681654-ca04-4fa4-8cbf-c32622f6e987%2Ftu7etnm_processed.png&w=3840&q=75)
Transcribed Image Text:Assume that the export price of a Sony Smartphone from Naguya, Japan is VIS. The
exchange rate is 87.60S. The forecast rate of inflation in the United States is 22% per
year and is 1,5% 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 Sony Smartphone at the begianing 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?
e. Assuming 100% pass-through of exehange rate, what will the dollar price of a Sony
Smartphone be at the end of the year?
nini
d. Assuming 80% pass-through, what will the dollar price of a Sony Smartphone be at
the end of the year?
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