Starting with an exchange rate of $1 = ¥110,and a price tag of ¥5,000 for a Japanese good,what happens to the dollar price of the good if the yen depreciates by 4 percent?
A) the dollar price of the good rises from $45.45 to $47.72
B) the dollar price of the good falls from $45.45 to $43.64
C) the dollar price of the good falls from $550,000 to $522,500
D) the dollar price of the good rises from $550,000 to $577,500
E) the dollar price of the good rises falls from $450 to $427.50
Correct Answer:
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