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1. (20 points) Assume that the price of a Toyota model exported from Japan to the United States is $29,000. The spot exchange rate at

1. (20 points) Assume that the price of a Toyota model exported from Japan to the United States is $29,000. The spot exchange rate at the beginning of the year was 113.00/$. During the year the Japanese yen appreciated at a steady pace, and by the end of the year the exchange rate was 104.00/$. Use these data to answer the following questions on exchange rate pass-through.

(a) What was the export price at the beginning of the year expressed in Japanese yen?

(b) What would need to be the US price at the end of the year in order for Toyota to maintain the yen-value it gets for each unit sold?

(c) Suppose at the end of the year, a Corolla cost $31,000 in the U.S. What was the pass-through rate?

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