Illustrate what will be the new equilibrium price

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Q. Suppose that on January 1, the yen price of the dollar is 120. Over the years, the Japanese inflation rate is 5 perecent, and the U.S inflation rate is 10 perecent. If the exchange rate is $1=Y130 at the end of the year, does the yen appear to be overvauled, undervalued, or at the PPP level? Explain your answer.

Q. Candy bars is in equilibrium price of $1 per bar. Draw a graph with an upward-sloping supply curve ande downward-sloping demand curve. Illustrate what will be the new equilibrium price, if the government puts a 15 cent per tax on the candy?

Reference no: EM1351414

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