That is why the jump in May’s unemployment rate – from 7.2 percent to 7.5 percent, the highest during this business cycle – caused dismay. Yet this…
September 3, 2020
Recall exercise 2 from Chapter 4 in which an increase in the toll on a highway from $.40 to$.50 would reduce use of the highway by 10,000 cars per…
September 3, 2020

Suppose PPP holds. Initially 85 yen (¥) buys the same in Japan as 1 Canadian dollar (C$) buys in Canada.

(a) What is the nominal exchange rate between the ¥ and the C$?

(b) There is then 3% inflation in Japan and 11% inflation in Canada. (This could occur over the course of just one year or over the course of multiple years, it doesn’t matter.) What is the nominal exchange rate after this inflation? Give the exchange rate to one decimal and in per C$1 terms.

(c) Did the Japanese yen appreciate or depreciate (in a nominal sense) over this period?

KM
Place Order