Homework answers / question archive / Suppose that the spot exchange rate between the Japanese Yen (Y) and the U

Suppose that the spot exchange rate between the Japanese Yen (Y) and the U

Math

Share With

Suppose that the spot exchange rate between the Japanese Yen (Y) and the U.S. dollar ($) was Y110/$1 in 1990.  Between 1990 and 1995, the consumer price index rose 20% in  Japan, and 30% in the U.S.  Then what will be the sport exchange rate in 1995 predicted by  the Purchasing Power Parity Hypothesis?