Q1 suppose that on january 1 the price of one hundred yen, Ask an Expert

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Q1. Suppose that on January 1, the price of one hundred yen was $0.80 and PPP held. Over the year, the Japanese inflation rate was 5 percent and the U.S. inflation rate was 10 percent. If the exchange rate at the end of the year was $0.90, does the yen appear to be overvalued, undervalued, or at the PPP level? Explain your answer.

Q2. It has been noted that during World War II, Germany made a critical mistake by having its formidable Tiger tanks produced by locomotive manufacturers while the less formidable U.S. Sherman tank was produced by American car manufacturers. Use the product-process matrix to explain that mistake and its likely result.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M9722069

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