Suppose a bottle of wine sells for $16 in California and for 10 in France. Assuming a

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Suppose a bottle of wine sells for $16 in California and for €10 in France. Assuming a nominal exchange rate of 0.75 euro per dollar,

a) calculate the real exchange rate between U.S. wine and French wine.

b) calculate the real exchange rate between U.S. wine and French wine if the domestic price of U.S. wine drops to $12 a bottle.

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Macroeconomics Policy And Practice

ISBN: 978-0133424317

2nd Edition

Authors: Frederic Mishkin

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Question Posted: Feb 20, 2024 04:00 AM

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Suppose a bottle of wine sells for $16 in California and for 10 in France. Assuming a

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a To calculate the real exchange rate between US wine and French wine we follow the formula Real Exc...View the full answer

Macroeconomics Policy And Practice

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