One year ago, the exchange rate between the pound and the dollar was $1=$1.50. The current exchange rate is $1=$1.32. During the year, the inflation rate was 3% in the U.K. and 7% in the US.

If the current exchange rate is deemed to be in equilibrium condition, was there a change in the real exchange rate between the pound and the dollar?

Answer rating: 100% (QA)

To determine if there was a change in the real exchange rate between the pound and the dollar we nee... View the full answer