Suppose the price indexes in Mexico and the U.S., which both began the year at 100, are at 160 and 103, respectively, by the end of the year. If the exchange rate began the year at Mex$4.5 = $1 and ended the year at Mex$5.9 = $1, then calculate  the change in the real value of the peso during the year.

Answer rating: 100% (QA)

To calculate the change in the real value of the peso we need to adjust the exchange rate and pr... View the full answer