Question: 2. Initially, the real exchange rate was q = 0.8. Then, Home price changed. Because of the change, the real exchange rate changed to 1.1.

2. Initially, the real exchange rate was q = 0.8. Then,

2. Initially, the real exchange rate was q = 0.8. Then, Home price changed. Because of the change, the real exchange rate changed to 1.1. 2.a. Answer how Home price changed: Increased or Decreased. 2.b. Before the change, which consumption basket was more expensive: Home consumption basket or Foreign consumption basket? After the change, which consumption basket was more expensive! Home consumption basket or Foreign consumption basket? Before the change: After the change

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