1. A bundle of goods in Japan costs 2,600,000 while the same goods and services cost $36,000 in the United States.

If purchasing power parity holds, what is the current exchange rate of U.S. dollars for yen?

If, over the next year, inflation is 7 percent in Japan and 9 percent in the United States, what will the goods cost next year?

Cost of Goods

Japan :

USA $ :

Will the dollar depreciate or appreciate relative to the yen over this time period?