If the nominal exchange rate increases by 5%, while domestic inflation is 2% and foreign inflation is 3% then the real exchange rate changed by?
Find the real exchange rate
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economics
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0Over what time period are you talking? – 2012-11-19
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0The question does not mention about the time period. So, I assume that it is long run. – 2012-11-19
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0The question is impossible to answer without more information. Is the inflation applied yearly, monthly, daily, hourly, or continuously? – 2012-11-19