The Inflation Rate in the U

question 38

Multiple Choice

The inflation rate in the U.S. is 4%, while the inflation rate in Japan is 1.5%. The current exchange rate for the Japanese yen (¥) is $0.0080. After supply and demand for the Japanese yen has adjusted according to purchasing power parity, the new exchange rate for the yen will be

• A) $0.0078.
• B) $0.0082.
• C) $0.0111.
• D) $0.00492.
• E) None of the above

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