Question

Suppose the exchange rate between the US and Japan changes from $1=100 yen to $1=110 yen. What would happen to the prices of American goods in Japan?

Answer 1

Answer:

If the exchange rate between the US and Japan changes from $1=100 yen to $1=110 yen, American goods in Japan would increase their prices. This is so because more yen would be necessary to buy the same product. For example, if an American product cost $1, a Japanese could buy it with 100 Yen, but after the change in the exchange rate, it would cost 110 Yen.