PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Chapter 17, Problem 2RQ
To determine
Differentiate between nominal and real exchange rate.
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In 1992, 18.6 million Canadians visited the United States, but only 11.8 million U.S. residents visited Canada. By 2002, roles had been reversed: more U.S. residents visited Canada than vice versa.
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The nominal exchange rate is the price of one currency in terms of another currency. A nominal exchange rate specifies how many units of one country's currency are needed to buy one unit of another country's currency.
Suppose the following table presents nominal exchange rate data for May 21, 2019, in terms of U.S. dollars per unit of foreign currency. Use the information in the table to answer the questions that follow.
Foreign Currency
Cost of One Unit of Foreign Currency
(Dollars)
Brazilian real (BRL)
0.3666
Canadian dollar (CAD)
0.8493
Euro (EUR)
1.3288
Japanese yen (JPY)
0.009748
Mexican peso (MXN)
0.0889
United Kingdom pound (GBP)
1.8965
Suppose that on May 21, 2019, a marble statue handmade in Brazil is priced at BRL 2,750. The approximate U.S. dollar price of the statue would be .
If the nominal exchange rate for the U.S. dollar–euro rises from $1.3288 to $1.52812 per euro, the euro in value, or , relative to the U.S. dollar.
The nominal exchange rate is the price of one currency in terms of another currency. A nominal exchange rate specifies how many units of one
country's currency are needed to buy one unit of another country's currency.
Suppose the following table presents nominal exchange rate data for November 26, 2019, in terms of U.S. dollars per unit of foreign currency. Use the
information in the table to answer the questions that follow.
Cost of One Unit of Foreign Currency
Foreign Currency
(Dollars)
Brazilian real (BRL)
0.4755
Canadian dollar (CAD)
0.8666
Euro (EUR)
1.2151
Japanese yen (JPY)
0.008538
Mexican peso (MXN)
0.0942
United Kingdom pound (GBP)
1.7552
Suppose that on November 26, 2019, an ornamental bookcase handmade in Germany is priced at EUR 830. The approximate U.S. dollar price of the
bookcase would be
If the nominal exchange rate for the U.S. dollar-Japanese yen rises from $0.008538 to $0.0093918 per Japanese yen, the Japanese
yen
v in value. or
, relative to the U.S. dollar.
Chapter 17 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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