ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Assume that American rice sells for $100 per bushel,
Japanese rice sells for 16,000 yen per bushel, and the
nominal exchange rate is 80 yen per dollar.
a. Explain how you could make a profit from this
situation. What would be your profit per bushel
of rice? If other people were to exploit the same
opportunity, what would happen to the price of rice
in Japan and the price of rice in the United States?
b. Suppose that rice is the only commodity in the
world. What would happen to the real exchange
rate between the United States and Japan?
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