Answer to Question #81594 in Economics for Derek

Question #81594
In 2017 the exchange rate is 1 ¥ (Japanese Yen) to $0.02 (US dollar). In 2018 the exchange rate is 1 ¥ to $0.01. Answer the following questions.

a) Is the above quote a direct or indirect quote? Why?

b) Between 2017 and 2018 did the dollar appreciate or depreciate?

c) As a result of the change in exchange rates between 2017 and 2018 will US exports become cheaper or more expensive to the Japanese?

d) As a result of the change in exchange rates between 2017 and 2018, will US imports from Japan become cheaper or more expensive to Americans?
1
Expert's answer
2018-10-03T06:18:09-0400
a) The above quote is indirect quote, because the domestic currency is fixed at 1 unit.
b) Between 2017 and 2018 the dollar appreciated, as you can buy less dollars for 1¥.
c) As a result of the change in exchange rates between 2017 and 2018 US exports will become more expensive to the Japanese.
d) As a result of the change in exchange rates between 2017 and 2018, US imports from Japan become cheaper to Americans.

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