Complete currency pass through suggests that if the dollar's exchange value depreciates by 10 percent, imports will become 10 percent more expensive to Americans while U.S.exports will become 10 percent cheaper to foreigners.

Question

Quizplus · Accepted Answer

Complete currency pass through means that there is a full transmission of exchange rate changes to the prices of imports and exports. Therefore, a 10 percent depreciation of the dollar would lead to a 10 percent increase in the price of imported Toyotas in the U.S. market.

Complete Currency Pass Through Suggests That If the Dollar's Exchange