3. The Venezuelan political and economic crisis deepened in late 2015 and early 2016. On January 1st, 2016, the bolivar was trading at B6,35/$. By April 9th, its value had fallen to B9,95/$. Many currency analysts and forecasters were predicting that the boliviano would fall an additional 35% from its February 1st value by early summer 2006.

a.What was the percentage change between January and April

b.Forecast value for June 2016?

4. Assume that the export price of a Sony Smartphone from Nagoya, Japan is 15,000. The exchange rate is 87.60/$. The forecast rate of inflation in the United States is 2.2% per year and is 1,5% per year in Japan. Use this data to answer the following questions on exchange rate pass through.

a. What was the export price for the Sony Smartphone at the beginning of the year expressed in U.S. dollars?

b. Assuming purchasing power parity holds, what should the exchange rate be at the end of the year

c. Assuming 100% pass-through of exchange rate, what will the dollar price of a Sony Smartphone be at the end of the year?

d. Assuming 80% pass-through, what will the dollar price of a Sony Smartphone be at the end of the year?