Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price

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Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4.

a) What is the nominal exchange rate?

b) Suppose the real exchange rate rises 10%, the inflation rate in the domestic country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change?

c) Suppose the nominal exchange rate rises 5%, the real exchange rate rises 8%, and domestic inflation is 3%. What is the foreign inflation rate?

Related Book For answer-question

Essentials of Econometrics

ISBN: 978-0073375847

4th edition

Authors: Damodar Gujarati, Dawn Porter

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Posted Date: Dec 24, 2020 04:11 AM

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Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price

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Essentials of Econometrics

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