-Refer to Table 12

question 99

Multiple Choice

-Refer to Table 12.2. Assume the exchange rate is fixed at 100 yen = $1 and that price changes for cars are identical to the inflation rate in each country. If a U.S. car is sold to Japanese importers for $10,000 in year 1, what is its price in year 2?

• A) $9,800
• B) $8,000
• C) $10,200
• D) $12,000
• E) $10,000

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Definitions:

Demand

The quantity of a particular good or service that consumers are willing and able to purchase at a given price level.

Budget Line

A graphical representation of all possible combinations of two goods which can be purchased with a given budget and prices.

Two-Product Case

A scenario in economic analysis focusing on the effects of changes in production levels, costs, and demand for two products simultaneously.

Change in Income

A variation in an individual's or household's earnings over a specific time frame.