The dollar–yen exchange rate falls from 100 to80 yen per dollar. At the same time, the price levelin the United States rises from 180 to 200, and theprice level in Japan remains the same. As a result,a. American goods have become more expensiverelative to Japanese goods.b. American goods have become less expensiverelative to Japanese goods.c. the relative price of American and Japanesegoods has not changed.d. both American and Japanese goods have becomerelatively less expensive.
The dollar–yen exchange rate falls from 100 to80 yen per dollar. At the same time, the price levelin the United States rises from 180 to 200, and theprice level in Japan remains the same. As a result,a. American goods have become more expensiverelative to Japanese goods.b. American goods have become less expensiverelative to Japanese goods.c. the relative price of American and Japanesegoods has not changed.d. both American and Japanese goods have becomerelatively less expensive.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
The dollar–yen exchange rate falls from 100 to
80 yen per dollar. At the same time, the price level
in the United States rises from 180 to 200, and the
price level in Japan remains the same. As a result,
a. American goods have become more expensive
relative to Japanese goods.
b. American goods have become less expensive
relative to Japanese goods.
c. the relative price of American and Japanese
goods has not changed.
d. both American and Japanese goods have become
relatively less expensive.
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