If the US currency pass-through is 60 percent,what will occur as a result of a 15 percent depreciation in the value of the dollar?
A)import prices to fall by 9 percent
B)import prices to rise by 15 percent
C)export prices to fall by 9 percent
D)export prices to rise by 15 percent

Question

Quizplus · Accepted Answer

A currency pass-through of 60 percent means that 60 percent of the depreciation of the dollar will be passed on to import prices. Therefore, a 15 percent depreciation of the dollar would result in a 9 percent increase in import prices (15% x 60% = 9%).

If the US Currency Pass-Through Is 60 Percent,what Will Occur