Full pass-through means that a 10% rise in the overseas price of an imported good leads to:
A) a 100% rise in the domestic price.
B) a greater than 10% rise in the domestic price.
C) a 10% rise in the domestic price.
D) a less than 10% rise in the domestic price.

Question

Quizplus · Accepted Answer

Full pass-through means that the entire change in the foreign price is passed onto the domestic price. Therefore, a 10% rise in the overseas price of an imported good leads to a 10% rise in the domestic price.

Full Pass-Through Means That a 10% Rise in the Overseas