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In 1983 the Japanese yen-U.S. dollar exchange rate was 245 yen per dollar, and the dollar cost of a compact Japanese-manufactured car was $8,000. Suppose
In 1983 the Japanese yen-U.S. dollar exchange rate was 245 yen per dollar, and the dollar
cost of a compact Japanese-manufactured car was $8,000. Suppose that now the exchange
rate is 80 yen per dollar. Assume there has been no inflation in the yen cost of an
automobile so that all price changes are due to exchange rate changes. What would the
dollar price of the car be now, assuming the cars price changes only with exchange rates?
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