A bundle of goods in Japan costs 4,235,000 while the same goods and services cost $31,200 in the United States.

a.	If purchasing power parity holds, what is the current exchange rate of U.S. dollars for yen? (Round your answer to 4 decimal places. (e.g., 32.1616))

Current exchange rate

$ per yen

b.	If, over the next year, inflation is 8 percent in Japan and 7 percent in the United States, what will the goods cost next year?

	Cost of Goods
Japan
United States	$

c.

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

	Appreciate
	Depreciate