Suppose 40% of Home trade is with country 1, 30% is with country 2 and rest is with country 2. Home's currency apperciates 10% against country 1, 16% against country 2 but depreciates 25% against country 3. Does home's effective exchange rate apperciated or depreciate? By how much?

Answer rating: 100% (QA)

Home Trade with Country 1 40 Country 2 30 Country 3 30 home currency with Country 1 appr... View the full answer