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Toyota's Pass-Through.  Assume that the export price of a Toyota Corolla from​ Osaka, Japan, is ​¥2,100,000....

Toyota's Pass-Through.  Assume that the export price of a Toyota Corolla from​ Osaka, Japan, is ​¥2,100,000. The exchange rate is ​¥87.61​/$. The forecast rate of inflation in the United States is 2.1​% per year and in Japan it is 0.0​% per year. Use this data to answer the following questions on exchange rate​ pass-through.

a. What was the export price for the Corolla at the beginning of the year expressed in U.S.​ dollars?

b. Assuming purchasing power parity​ holds, what should be the exchange rate at the end of the​ year?

c. Assuming​ 100% exchange rate​ pass-through, what will be the dollar price of a Corolla at the end of the​ year?

d. Assuming​ 75% exchange rate​ pass-through, what will be the dollar price of a Corolla at the end of the​ year

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