What is the real exchange rate?
What is the real exchange rate?
Homework Answers
Real exchange rate determines the relationship between two parameters goods produced in the domestic country with goods produced abroad. Hence the same relationship is multiplied with the nominal exchange rate. Here we can see the product's demand in abroad with respect to the demand in the domestic market. Rates of interest and inflation economically can influence on the Real exchange rate.
What factors cause the real exchange rate to rise? What does real exchange rate appreciation (depreciation)...
What factors cause the real exchange rate to rise? What does real exchange rate appreciation (depreciation) imply for net exports? Why? What is PPP predicted real exchange rate? PPP predicted nominal exchange rate?
9 What is real exchange rate? Show how real exchange rate depreciation of a country's currency...
9 What is real exchange rate? Show how real exchange rate depreciation of a country's currency can promote CA surplus?
Assume the exchange rate is defined as f/$. What is the real exchange rate? If there...
Assume the exchange rate is defined as f/$. What is the real exchange rate? If there is and appreciation of the $, what happens to the price of foreign goods measured in dollars and of US goods measured in the foreign currency? What is the effect on US imports and exports and Y. Explain.
How nominal exchange rate is different from real exchange rate? What is the relationship between purchasing-power...
How nominal exchange rate is different from real exchange rate? What is the relationship between purchasing-power parity and exchange rates? 3.What is the impact on new housing investment, if there is a decrease in real interest rates? (5 points) 4.What is the impact on the loanable funds market, if the quantity of loanable funds supplied is more than the quantity demanded?
If Purchasing power parity (PPP) holds, a. the real exchange rate increases b. the real exchange...
If Purchasing power parity (PPP) holds, a. the real exchange rate increases b. the real exchange rate decreases c. the real exchange rate does not change d. prices in the foreign country will increase
Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign...
Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. What is the nominal exchange rate? (3%) a. Suppose the real exchange rate rises by 10%, the inflation rate in the domestic b. country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change? (3%) Suppose the nominal exchange rate rises by 5%, the real exchange rate rises by...
What happens to the real exchange rate and net exports in each of the following cases?...
What happens to the real exchange rate and net exports in each of the following cases? a. Import restrictions i.e. quota or tariffs on foreign goods b. The domestic prices rise more than foreign prices c. nominal exchange rate e falls
6. Assume that the current dollar-Euro exchange rate (Ese) i equal to 1, the real exchange...
6. Assume that the current dollar-Euro exchange rate (Ese) i equal to 1, the real exchange rate (qua/tur) = 1.26, the price level equals 2 in the U.S. and 2.5 in Europe. Assume that relative PPP holds. a. If inflation is 5% in the u.s. but 28 in Europe, what will be the price levels in the U.S. and Europe a year from now? b. What will be the nominal exchange rate (Ese) a year from now? c. What will...
What would happen to Bolivia’s real exchange rate in each of the following situations? The Bolivian...
What would happen to Bolivia’s real exchange rate in each of the following situations? The Bolivian nominal exchange rate is unchanged. Prices rise faster in other countries than in Bolivi (3 points) The Bolivian nominal exchange rate increases. Prices rise faster in Bolivia than abroad. (3 points)
What will happen to the trade balance and the real exchange rate of the US if...
What will happen to the trade balance and the real exchange rate of the US if Congress decreases government purchases to balance the budget? Graph this situation using the open economy model. What happens when countries outside the US implement fiscal austerity to satisfy the IMF?
9 What is real exchange rate? Show how real exchange rate depreciation of a country's currency can promote CA surplus?
Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. What is the nominal exchange rate? (3%) a. Suppose the real exchange rate rises by 10%, the inflation rate in the domestic b. country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change? (3%) Suppose the nominal exchange rate rises by 5%, the real exchange rate rises by...
6. Assume that the current dollar-Euro exchange rate (Ese) i equal to 1, the real exchange rate (qua/tur) = 1.26, the price level equals 2 in the U.S. and 2.5 in Europe. Assume that relative PPP holds. a. If inflation is 5% in the u.s. but 28 in Europe, what will be the price levels in the U.S. and Europe a year from now? b. What will be the nominal exchange rate (Ese) a year from now? c. What will...
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