Assume that the exchange rate between the dollar and the Yen is ¥100 = $1. Suppose the exchange rate changes to ¥150 = $1. What is the price in Yes of a $200 iPod before and after the exchange rate change? a. ¥20 000 before; ¥15 000 after. b. ¥20 000 before; ¥30 000 after. c. ¥300 before; ¥150 after. d. ¥300 before; ¥200 after.
Question
Assume that the exchange rate between the dollar and the Yen is ¥100 = 1. What is the price in Yes of a $200 iPod before and after the exchange rate change?
a. ¥20 000 before; ¥15 000 after.
b. ¥20 000 before; ¥30 000 after.
c. ¥300 before; ¥150 after.
d. ¥300 before; ¥200 after.
Solution
The price of a 200 * ¥100/$1 = ¥20,000. This is the price before the exchange rate change.
After the exchange rate change, the price would be calculated in the same way, but using the new exchange rate. So, 1 = ¥30,000. This is the price after the exchange rate change.
So, the correct answer is:
b. ¥20,000 before; ¥30,000 after.
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