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marshall27 [118]
3 years ago
15

7) Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. (a) What is the nomina

l exchange rate? (b) Suppose the real exchange rate rises by 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 by 5%, the real exchange rate rises by 8%, and domestic inflation is 3%. What is the foreign inflation rate
Business
1 answer:
konstantin123 [22]3 years ago
4 0

Answer and Explanation:

The computation is shown below:

1. Nominal exchange rate is

= (Real exchange rate) × (foreign price level ÷ domestic price level)

= 10 × (4 ÷ 8)

= 5

2. Change in Nominal exchange rate is

Change in  Nominal exchange rate = (real exchange rate change )  + foreign inflation - domestic inflation

= 10 + 4 - 6

= 8%

3.) foreign inflation rate

= Change in Nominal exchange rate - real exchange rate change + domestic inflation

= 5 - 8 + 3

= 0%

We simply applied the above formulas

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Less than average total Cost

Explanation:

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Answer:

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The two independent clauses in the following compound-complex sentence are.

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