Purchasing Power Parity Forecasts. Use the table containing economic, financial, and business indicators to answer the following questions. Assuming purchasing power parity, and assuming that the forecasted change in consumer prices is a good proxy of predicted inflation, forecast the following exchange rates:

a. Japanese yen/U.S. dollar in one year

b. Japanese yen/Australian dollar in one year

c. Australian dollar/U.S. dollar in one year

The table below contains economic, financial, and business indicators from 2015:

Forecasting the Pan-Pacific Pyramid: Australia, Japan, and the United States
											Industrial			Unemployment
		Gross Domestic Product									Production			Rate
						Forecast		Forecast
Country		Latest Qtr		Qtr		2015e		2016e			Recent Qtr			Latest
Australia		4.5	%	3.8	%	4.3	%	3.5	%		4.7	%		4.2	%
Japan		1.8	%	-1.1	%	2.7	%	1.8	%		4.1	%		3.9	%
United States		1.9	%	3.6	%	2.7	%	2.2	%		1.6	%		4.7	%
		Consumer Prices									Interest Rates
						Forecast					3-month			1-yr Govt
Country		Year Ago		Latest		2015e					Latest			Latest
Australia		4.4	%	2.8	%	2.3	%				6.95	%		6.22	%
Japan		0.9	%	-0.5	%	0.0	%				0.73	%		1.62	%
United States		2.4	%	2.6	%	3.1	%				4.86	%		4.59	%
		Trade
		Balance			Current Account						Current Units (per US$)
		Last 12 mos			Last 12 mos			Forecast 15
Country		(billion $)			(billion $)			(% of GDP)			Oct 17th			Year Ago
Australia		-12.7			-46.3			-5.8	%		1.14			1.35
Japan		98.6			197.9			4.7	%		118.00			121.00
United States		-810.6			-793.1			-5.7	%		1.00			1.00
Note: Unless otherwise noted, percentages are percentage changes over one year. Rec Qtr = recent quarter. Values for 2015e are estimates or forecasts.