In 1980 the dollar to yen exchange rate was about $0.0045.In 2007 the yen to dollar exchange rate was about 121 yen per dollar.A Japanese producer would have had to increase the dollar price of a good sold in the U.S.by _____ to maintain the same yen price in 2007.

Question

Quizplus · Accepted Answer

To maintain the same yen price, the dollar price must increase by the percentage change in the exchange rate. In 1980, 1 yen = $0.0045, so 1 dollar = 1/0.0045 yen = 222.22 yen. In 2007, 1 dollar = 121 yen. The percentage increase in the dollar price is ((222.22 - 121) / 121) * 100% = 83.7%.

In 1980 the Dollar to Yen Exchange Rate Was About