Suppose that U.S dollar depreciates 70 percent against the yen yet Japanese export prices to Americans did not decrease by the full extent of the dollar depreciation. This is best explained by ?
Correct answer: A. partial currency pass through
- A. partial currency pass through
- B. complete currency pass through
- C. partial J curve effect
- D. complete J curve effect
Explanation
If the dollar depreciates by 70 percent but Japanese prices in dollars do not fall by the full amount, the exchange-rate change has only partly passed through to export prices. This is partial currency pass-through, not a J-curve effect.
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