Short Answer
Suppose the real exchange rate is 10,the domestic price level is 8,and the foreign price level is 4.
a.What is the nominal exchange rate?
b.Suppose the real exchange rate rises 10%,the inflation rate in the domestic country is 6%,and the inflation rate in the foreign country is 4%.By what percentage does the nominal exchange rate change?
c.Suppose the nominal exchange rate rises 5%,the real exchange rate rises 8%,and domestic inflation is 3%.What is the foreign inflation rate?
Correct Answer:
Verified
Correct Answer:
Verified
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