Question

1.) $802, $902, $1,002, $1,202

2.) increases/decreases

3.) depreciates/appreciates

6. Pricing foreign goods The nominal exchange rate is the price of one currency in terms of another currency. A nominal exchange rate speofies how many units of one country's currency are needed to buy one unit of another country's currency. Suppose the following table presents nominal exchange rate data for November 26, 2014, in terms of U.5. dollars per unit of foreign curreno, Ue the information in the table to answer the questions that follow. Cost of One Unit of Foreign Currency (Dollars) 0.3666 0.8493 1.3288 Foreign Currency Brazilian real (BRL) Canadian dollar (CAD) Euro (EUR) Japanese yen (JPY) Mexican peso (MXN) United Kingdom pound (GBP) 0.009748 0.0889 1.8965 Suppose that on November 26, 2014, an ornamental bookcase handmade in Canada is priced at CAD 1,180 bookcase would be The approximate U.S. dollar price of the If the nominal exchange rate for the U.S. dollar-Japanese yen falls from $0.009748 to $0.0082858 per Japanese yen, the Japanese yen ,relative to the U.S. dollar in value, or

Answer 1

As the exchange rate between the Canadian dollar and US dollar is 1 CAD = $0.8493.

So, 1,180 CAD = (0.8493 * 1,180) = $1,002.174 or $1,002.

So, on November 26, 2014, if an ornamental bookcase handmade is priced at CAD 1,180, the approximate US dollar price of the bookcase would be $1,002.

Now, if the nominal exchange rate for the U.S. dollar-Japanese yen falls from $0.009748 to $0.0082858 per Japanese yen, the Japanese yen decreases in value, or depreciates, relative to the U.S. dollar.

This is because now 1 Japanese yen can buy less U.S. dollars than before.