By how much does the real, bilateral exchange rate change when the nominal, bilateral exchange rate changes from $1.10/€ to $1.00/€, the U.S. tradable basket from $500 to $600 and the Euro-Area tradable basket from €550 to €580?
a. The real exchange rate rises approximately by 18%.
b. The real exchange rate rises approximately by 20%.
c. The real exchange rate rises approximately by 3%
d. The real exchange rate falls approximately by 3%
e. The real exchange rate falls approximately by 20%
.E
Economics
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