Annual data for the countries of Alpha and Beta is presented in the following table. The...

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Annual data for the countries of Alpha and Beta is presented in the following table. The nominal exchange rate for the two countries is 1.5 francs per ruble. Nominal GDP Real GDP Alpha 5 billion rubles 4.6 billion rubles Beta 9 billion francs 7.5 billion francs a. Treating Beta as the home country and Alpha as the foreign country, calculate the real exchange rate. (real exchange rate = 0.736) b. What is the value of the nominal exchange rate for Beta (home country) as predicted by PPP? (PPP exchange rate = 0.9058 rubles per franc.) c. Using PPP as the reference point, is the current exchange rate for Beta undervalued or overvalued. (0.6667 is less than 0.9058, so undervalued). d. If PPP held exactly for Alpha and Beta, what would be the value of the real exchange rate for the two countries. (real exchange rate = 1.0) Annual data for the countries of Alpha and Beta is presented in the following table. The nominal exchange rate for the two countries is 1.5 francs per ruble. Nominal GDP Real GDP Alpha 5 billion rubles 4.6 billion rubles Beta 9 billion francs 7.5 billion francs a. Treating Beta as the home country and Alpha as the foreign country, calculate the real exchange rate. (real exchange rate = 0.736) b. What is the value of the nominal exchange rate for Beta (home country) as predicted by PPP? (PPP exchange rate = 0.9058 rubles per franc.) c. Using PPP as the reference point, is the current exchange rate for Beta undervalued or overvalued. (0.6667 is less than 0.9058, so undervalued). d. If PPP held exactly for Alpha and Beta, what would be the value of the real exchange rate for the two countries. (real exchange rate = 1.0)

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d If PPP held exactly for Alpha and Beta the value of the real exchange ... View the full answer