Question: Suppose absolute purchasing power holds true between two countries, Home and Foreign, and the price level increases 4 % in Home and it decreases by

Suppose absolute purchasing power holds true between two countries, Home and Foreign, and
the price level increases 4% in Home and it decreases by 2% in Foreign.
(a.) What happens to the price of Foreigns currency in terms of Homes currency?
(b.) What is the real exchange rate, defined as the price of one unit of the foreign basket of goods
in terms of units of the domestic basket of goods?

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