1. A bundle of goods in Japan costs 2,520,000 while the same goods and services cost $34,000 in the United States.
a.	If purchasing power parity holds, what is the current exchange rate of U.S. dollars for yen? (5)

b.	If, over the next year, inflation is 10 percent in Japan and 8 percent in the United States, what will the goods cost next year? (6)

Japan:

United States:

c.	Will the dollar depreciate or appreciate relative to the yen over this time period? (5)