Question: solve 4 & 5 The American real exchange rate will increase if the other countries price deflator rises faster than the American price deflator the

solve 4 & 5

The American real exchange rate will increase if the other countries price deflator rises faster than the American price deflator the other countries price deflator rises faster than the nominal exchange rate the American price deflator declines by less than the amount of the nominal exchange rate decline the American price deflator rises faster than the other countries price deflator Question 5 Assume we purchase goods from another country and they do not want to buy any products from us. The businesses in that country then have to make a decision to hold our cash or do what? hold our interest bearing assets stop buying from America sell our cash to other countries they will just keep accumulating our cash

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