Suppose that on May 21, 2014, a marble statue handmade in Japan is priced at 118

Question

Suppose that on May 21, 2014, a marble statue handmade in Japan is priced at 118,880 JPY. The approximate U.S. dollar price of the statue would be (812%, 914%, $1,015, $1,218).

If the exchange rate for the U.S. dollar–Mexican peso falls from $0.0942 to $0.07065 per Mexican peso, the U.S. dollar (increases, decreases) in value, or (appreciate, depreciate), relative to the Mexican peso

6. Pricing foreign goods The exchange rate is the price of one currency in terms of another currency. An exchange rate specifies how many units of one country's currency are needed to buy one unit of another country's curency Suppose the following table forecasts exchange rate data for May 21, 2014, in terms of u s dal- the information in the table to answer the questions that follow. Cost of One Unit of Foreign Currency Foreign Currency Brazilian real (BRL) Canadian dollar (CAD) Euro (EUR) Japanese yen (JPY) Mexican peso (MXN) United Kingdom pound (GBP) Dollars) 0.4755 0.8666 1.2151 0.008538 0.0942 1.7552

Explanation / Answer

Suppose that on May 21, 2014, a marble statue handmade in Japan is priced at 118,880 JPY. The approximate U.S. dollar price of the statue would be $1,015. (i.e 0.008538 * 118,880)

If the exchange rate for the U.S. dollar–Mexican peso falls from $0.0942 to $0.07065 per Mexican peso, the U.S. dollar increases in value, or appreciate, relative to the Mexican peso.

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