1)Between 1982 and 2006, the S(/$) exchange rate moved from S(/$) 249.05 to S(/$) 116.34. During this same 25-year period, the consumer price index (CPI) in Japan rose from 80.75 to 97.72, and the CPI in the US rose from 56.06 to 117.07.

a)If PPP held over this 25-year period, what should the S(/$) exchange rate have been in 2006?

b)Was there a real appreciation or depreciation in the over this 25-year period (be sure to provide quantitative justification for your answer)?

c)Were there likely any associated positive or negative competitive pressures on Japanese exporters vs importers? If so, what likely happened to the competitive position of Japanese exporters? Japanese importers? Why (briefly)?