Author Question: Based on the case study, Exchange Rates, Auto Prices, and Currency Wars, explain why exchange rates ... (Read 209 times)

bucstennis@aim.com · **on:** Jun 30, 2018

Based on the case study, Exchange Rates, Auto Prices, and Currency Wars, explain why exchange rates are of critical importance to firms in the automobile industry, and how Japan has benefited from changes in the value of the Yen.

What will be an ideal response?

Question 2

According to Prebisch and other ISI theoreticians, countries should begin to shift their comparative advantage away from primary commodity production by first producing

A) industrial goods such as pumps and generators.
B) complex consumer goods such as autos and appliances.
C) advanced industrial goods such as chemical and electronics.
D) simple consumer goods such as food products and textiles.
E) minerals and agricultural products.

dominiqueenicolee · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

See the discussion at the beginning of the chapter and in the case. Japan experienced a 15 drop in the value of the yen relative to the U.S. dollar in 2013. This increased Japanese exports of autos while reducing imports from the U.S.

Answer to Question 2

D