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 20.
b. The real exchange rate rises approximately by 3
c. The real exchange rate falls approximately by 3
d. The real exchange rate falls approximately by 20
e. The real exchange rate falls approximately by 18
Question 2
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
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