Homework Answers
Solution-
Cost of Basket in Cost of basket in Nominal Exchange Real Exchange
U.S. Japan rate rate
18 570 95.00 3
18 570 76.00 2.4
Reason-
18 x 95 = 1710
Real exchange rate = 1710 / 570 = 3
18 x 76 1368
Real exchange rate = 1368 / 570 = 2.4
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