Problem

The U.S. dollar depreciated markedly against the yen in the early 1990s, and yet U.S. net imports from Japan continued to rise in the short run. How might this counterintuitive behavior be explained? 5. Do you as a consumer think that there is much of a time lag between when a price change of an imported good in your market basket occurs and when you react (if at all) to this price change? If so, why? If not, why not? If your reaction time is shared by all consumers of imports, what implication would there be for the impact of a change in currency values on the current account balance in the short run? Explain.