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Effects of exchange rate change

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On January 1, the U.S. dollar:Japanese yen exchange rate is $1 = ¥250. During the year, U.S. inflation is 4% and Japanese inflation is 2%. On December 31, the exchange rate is $1 = ¥235. What are the likely competitive effects of this exchange rate change on Caterpillar Tractor, the American earth-moving manufacturer, whose toughest competitor is Japan's Komatsu?

Reference no: EM131105452

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