In March 2017, the exchange rate for the Narnian leo was L2,419 = $1. Inflation in the

Question:

In March 2017, the exchange rate for the Narnian leo was L2,419 = $1. Inflation in the year to March 2018 was about 30% in Narnia and 2% in the United States.

a. If purchasing power parity held, what should have been the nominal exchange rate in March 2018?

b. The actual exchange rate in March 2018 in the midst of a currency crisis was L8,325 = $1. What was the change in the real exchange rate?

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...

Fantastic news! We've Found the answer you've been seeking!