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Answer to Question #105202 in Macroeconomics for John
Question #105202
Consider the real exchange rate. Suppose that the nominal exchange rate is 30, which is 10% lower than the level predicted by the absolute PPP. Answer how much the real exchange rate is.
Expert's answer
"Er=En\\times\\frac{P_f}{P_d}" = 30*0.9=27
Er - real exchange rate
En - nominal exchange rate
Pf/Pd - absolute PPP
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