Question

1.

A gadget costs $88.80 in the U.S. If absolute purchasing power parity exists, what will the same gadget cost in Japan if the indirect quote is 108.06? O JPY9, 171.26 JPY9,327.55 JPY9,595.73 OJPY9,746.21 JPY9,981.40

2.

Answer 1

Solution :- (1)

The Same gadget cost in the Japan = Gadget Cost in the US * Indirect Quote of $ in Yen

= $88.80 * 108.06

= JPY 9,595.73

Solution :- (2)

Price = $7,600

Amount Spend in Singapore in ($) = 5,200 * $0.71 = $3,692

Amount Spend in Japan in (Y) = 310,000 / 105.04 = $2,951.26

Now US ($) Left = $7,600 - $3,692 - $2,951.26 = $956.74

Now Convert $956.74 into GTQ = 956.74 * 7.7 = GTQ 7,366.92

Therefore Correct Answer is (e)

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