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Assume that the export price of a Toyota Corolla from Osaka, Japan is 2 , 5 0 0 , 0 0 0 . The spot
Assume that the export price of a Toyota Corolla from Osaka, Japan is The spot exchange rate is $ The forecast rate of inflation in the United States is per year and is per year in Japan. Use this data to answer the following questions on exchange rate passthrough.a What was the export price for the Corolla at the beginning of the year expressed in US dollars?b Assuming purchasing power parity holds, what should be the exchange rate at the end of the year?c Assuming passthrough of exchange rate, what will be the dollar price of a Corolla at the end of the year?d Assuming passthrough, what will be the dollar price of a Corolla at the end of the year?e Suppose at the end of the year, a Corolla cost $ in the US What was the passthrough rate?
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