Answer to Question 1
In general, the real exchange rate between two countries' currencies is the price of the second country's commodity basket (in terms of the first country's currency) relative to the price of the first country's commodity basket. For example, in the case of U.S. and Europe, the real dollar/euro exchange rate is the dollar value of Europe's price level divided by the U.S. price level. We can thus denote the real dollar/euro exchange rate ( ) as:
= ( PE)/PUS
where is the nominal dollar/euro exchange rate, PE is Europe's price level, and PUS is the U.S. price level. Unlike the real exchange rate, which is the relative price of two output baskets, the nominal exchange rate is the relative price of two currencies. However, as we can see from the equation above, real exchange rates are defined in terms of nominal exchange rates.
Answer to Question 2
The 2008-2009 global financial crisis resulted in appreciation of the franc as currency traders purchased the franc as a safe haven currency. The Swiss economy consequently suffered as its products became less competitive with imports. The Swiss responded by committing to currency intervention designed to control appreciation of the franc and restore the country's competitiveness in global markets.
Relative rate test, calibrating the molecular clock, and calculating divergence dates.
Inverse Relation Between IQ and Disease. Could this explain the Flynn effect?
The concept of a threshold stimulus.
How to solve rate problems leading to fractional equations (Question 2)
Who is the “real” Beyoncé—doting mother or Sasha Fierce?
The same pair of homologs, but with no exchange occurring between them