The nominal exchange rate is 15 crowns per florin, the domestic price level is 6 florins/bottle, and the foreign price level is 2 crowns/bushel
(a) What is the real exchange rate?
(b) What is the real exchange rate in the foreign country?
(c) If the domestic price level rises to 8 florins/bottle, what must the nominal exchange rate become if the real exchange rate remains unchanged?
(a) 45 bushels/bottle
(b) 1/45 bottle/bushel
(c) 11.25 crowns per florin
Economics
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