The Beginning-Of-The-Year Prices for a Pair of Boots Are $50

question 80

Essay

The beginning-of-the-year prices for a pair of boots are $50 in the United States and ¥8,000 in Japan.We know that prices in the United States and Japan will change over the coming year due to inflation.If we assume that inflation in the United States (our home country,inf_h)will be 3% and inflation in Japan will be 2% (our foreign country,inf_f),what will the price of the boots be at the end of the year? If one U.S.dollar can be exchanged for 160 Japanese yen today and purchasing power parity holds,what can we say about the future exchange rate one year from now?

---

Definitions:

Elicited

Brought about, provoked, or drawn out by a stimulus or action; in research, responses or actions that are drawn out by specific experimental conditions.

Emitted

Released or given off, often used in the context of light, heat, or sound.

Generalization

The process by which the brain applies previous learning to new situations that are similar but not identical.

Instrumental Learning

also known as operant conditioning, is a method of learning that occurs through rewards and punishments for behavior.