Question

The inflation rate in the U.S. is 1.5%, while the inflation rate in Japan is 4%. The current exchange rate for the Japanese yen (¥) is $0.0080. After supply and demand for the Japanese yen has adjusted according to purchasing power parity, the new exchange rate for the yen will be_____________.

Answer 1

Answer: lower in value in comparison to the US

Step-by-step explanation:

A comparative high inflation rate will have a negative effect on a country currency in comparison to other country exchange rate.