Deriving net exports By definition, net exports from Japan are equal to exports from Japan minus imports Into Japan. In a hypothetical two-country world, Imports into Japan are equal to exports from the United States. So the value for net exports from Japan is equal to exports from Japan minus exports from the United States. Graphically, at each exchange rate, the value for net exports is the horizontal distance from U.S. exports to Japanese exports. Use the graph input tool to answer the following questions. You will not be graded on any changes you make to the graph. (Note: To avoid dealing with decimal places, this calculator reports the price of yen in terms of dollars per 1,000 yen. That is, the price on the vertical axis is the dollar price of 3 1,000-yen pote instead of a single yen. As you have already seen, a price or 8 dollars per 1,000 yen is the same as 125 yon per dollar. Once you enter a value in a white fleket, the graph and any corresponding amounts in each grey perd will change accordingly.) Graph Input Tool 20 Price $2 yon 18 Exports from US (Dollars per 1,000 wind Graph Input Tool $2 18 Exports from US 18 Price (Dollars per 1,000 yon) Exports from Japan (Thin yen) NX from Japan (Trillion yen) 18 Exports from U.S. (Triton Yen) 2 14 12 16 EXCHANGE RATE (Dollars per 1,000 yen) 10 Exports from Japan 0 2 4 6 8 10 12 14 16 18 20 YEN(Trillion) Suppose that the price of yen is $4 per 1,000 yen. Net exports from Japan will be 12 trillion yen. Suppose that the price of yen is $6 per 1,000 yen, Net exports from Japan will be 8 trillion yen Based on the data from the previous two parts of this problem, use the blue ine (circle symbol) to plot net exports for Japan as a function of the price of yen on the following graph. (Note: Select and drag the curve from the palette to the desired position on the graph.) 10 14 NX from Japan 12 10 PRICE OF YEN (Dollars per 1.000 yen) 0 News Analysis: Exchange rates hold the key to trade between Japan and the United States (NEW) 10 8 PRICE OF YEN (Dollars per 1.000 . 2 3 - - 2 0 8 10 12 14 16 24 0 YEN (Trillion) The previous graph you constructed should show that net exports from Japan would be negative if the price of yen increased to a high enough level, such as an amount greater than $10 per 1,000 yen. If you convert this price into the form typically quoted in the newspaper, this price corresponds to 100 yen per dollar Grade It Now Save & Continue
