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In: Economics

Between last year and this year, the CPI in Blueland rose from 100 to 115 and...

Between last year and this year, the CPI in Blueland rose from 100 to 115 and the CPI in Redland rose from 100 to 110. Blueland’s currency unit, the blue, was worth $0.90 (U.S.) last year and is worth $0.75 (U.S.) this year. Redland’s currency unit, the red, was worth $0.60 (U.S.) last year and is worth $0.50 (U.S.) this year. Consider Blueland as the home country.

a. Calculate Blueland’s nominal exchange rate with Redland last year.

Instructions: Enter your response rounded to one decimal place.

red/blue.


b. Calculate Blueland’s nominal exchange rate with Redland this year.

Instructions: Enter your response rounded to one decimal place.

red/blue.


c. Calculate the percentage change in Blueland’s nominal exchange rate from last year to this year.

Instructions: Enter your response as an integer value. Be certain to enter "0" if required.

%.


d. Calculate Blueland’s real exchange rate with Redland last year.

Instructions: Enter your response rounded to one decimal place.

red/blue.


e. Calculate Blueland’s real exchange rate with Redland this year.

Instructions: Enter your response rounded to three decimal places.

red/blue.


f. Calculate the percentage change in Blueland’s real exchange rate with Redland.

Instructions: Enter your response rounded to three decimal places.

%.

g. Relative to Redland, you expect Blueland’s exports to be (Click to select)helpedhurtunaffected by these changes in exchange rates.

Solutions

Expert Solution

Rahul Sunny answered 7 months ago
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