From base price levels of 100 in 1987, West German and U S price levels in 1988 stood at 102 and 106, respectively If the 1987 $ DM exchange rate was $0 54, what should the exchange rate be in 1988 In fact, the exchange rate in 1988 was DM 1 $0 56 What might account for the discrepancy (Price level...

If e 1981 is the dollar value of the German mark in 1988 then acco ...

From base price levels of 100 in 1987, West German and U.S. price levels in 1988 stood

Question:

From base price levels of 100 in 1987, West German and U.S. price levels in 1988 stood at 102 and 106, respectively. If the 1987 $/DM was $0.54, what should the be in 1988? In fact, the in 1988 was DM 1 = $0.56. What might account for the discrepancy? (Price levels were measured using the consumer price index.)

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...