1. Quantify GM's competitive exposure to the Japanese yen. There are different ways to do this. I recommend calculating the percent change in price of Japanese cars and then applying a price cross-elasticity in the range of 0.5 to 2.0 (my assumption) to calculate the percent change in GM's U.S. sales.
Competitive exposure to Japanese yen = percent change quantity x US Sales $
= %ΔQGM x US Sales $ (1)
Percent change quantity for GM (%ΔQGM) cars and percent change price in Japanese Imports (%ΔPJP) are related by cross-price elasticity. A lower price for Japanese Imports will result in lower quantity sales for GM:
(2)
Cross-price elasticity is estimated to fall between 0.5 and 2.0 (see assignment).
Percent change price in Japanese Imports is caused by the depreciation of the yen. We are estimating that the percent change in price is equivalent to percentage of Japanese components (impacted by the depreciation) x the percentage of pass-through of those savings to the......

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Title: Macro Economics Paper
Approximate Word Count: 1205
Approximate Pages: 5 (250 words per double-spaced page)

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