1.1 What is the difference between the nominal exchange rate and the real exchange rate? When a newspaper article uses the phrase "the exchange rate," is the article typically referring to the nomi- nal exchange rate or the real exchange rate? 1.2 What is the difference between a direct quotation of an exchange rate and an indirect quotation? If the exchange rate between the yen and the dollar changes from 80 = +1 to 90 = +1, has the yen appreciated or depreciated against the dollar? Has the dollar appreciated or depreciated against the yen? 1.3 Suppose that the euro falls in value relative to the dollar. What is the likely effect on European exports to the United States? What is the likely effect on U.S. exports to Europe?