If the domestic prices for traded goods rises 5 in Japan and ...

[Pea0909berry]

If the domestic prices for traded goods rises 5 in Japan and rises 7 the US over the same period, what would happened to the Yen/US dollar exchange rate? HINT: S1/S0 = (1+h) / (1+ f) where S0 is the direct quote of the yen at time 0, the current period.
 a. The direct quote of the yen (/) rises, and the value of the dollar falls.
  b. The direct quote of the yen (/) falls, and the value of the dollar rises.
  c. The direct quote of the yen would remain the same.
  d. Purchasing power parity does not apply to inflation rates.
  e. Both a and d.

Question 2

Adam Smith's pin factory and Henry Ford's automobile assembly line are examples of
 a. Product lines
 b. Functionally organized firms
  c. Inefficient processes
 d. In-line production

[ju]

Answer to Question 1

b

Answer to Question 2

b