Managerial Economics: Applications, Strategy and Tactics 12th Edition by James McGuigan, Charles Moyer, Frederick Harris

Exercise 12

If core price inflation has grown at a compound growth rate of 2 percent per annum in the United States and 0.04 percent in Japan for the past eight years, what exchange rate represents PPP today if the two currencies eight years ago in 2002were in parity and exchanged at the rate of ¥120/$