If a Japanese car costs P*=1,000,000 yen, a similar American car costs P= 20,000, and a dollar can buy 100 yen, e 100 yen/$. Car is assumed to be identical and japan is next door to New Hampshire for simplicity: a. What is the real exchange rate? In which country is car more expensive? b. From which country would you buy and which country would you sell?

If a Japanese car costs P*=1,000,000 yen, a similar American car costs P= 20,000, and a dollar can buy 100 yen, e 100 yen/$. Car is assumed to be identical and japan is next door to New Hampshire for simplicity: a. What is the real exchange rate? In which country is car more expensive? b. From which country would you buy and which country would you sell?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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