1990 - 2000 Real and Nominl Exchange Rates1400.60Freal exchange rate (left)120Fnominal exchange rate (right)0.501000.40800.30600.20400.10200.00How can you explain occurence of stable real exchange rate while the nominal exchange rate accelaretly depreciates between 1996 – 1999.60-6661s0-666TTO-666160-866110-86611998-05 :60-L661SO-L66160-9661SO-9661TO-966160 5611995-0510-56160-Þ6611994-051O-46160-E66SO E66110-E66160-26611992-051992-011991-091991-0510-166160-0661so-06110-0661 Your answer:Equal inflation rates with trade partners.Lower inflation rates than trade partnersHigher inflation rates than trade partners

Stable real exchange rate arises,when trade of country is favorable,and favorable trade means…

1990 - 2000 Real and Nominl Exchange Rates 140 0.60 Freal exchange rate (left) 120 nominal exchange rate (right) 0.50 100 0.40 80 0.30 60 0.20 40 0.10 20 0.00 6 8888 8 How can you explain occurence of stable real exchange rate while the nominal exchange rate accelaretly depreciates between 1996 - 1999. 60-8661 SO-8661 1O-8661 60-L661 sO-L661 so-9661 60-5661 1995-05 1993-09 1993-05 to E661 60-2661 1992-05 TO-Z661 TO-1661

1990 - 2000 Real and Nominl Exchange Rates 140 0.60 Freal exchange rate (left) 120 nominal exchange rate (right) 0.50 100 0.40 80 0.30 60 0.20 40 0.10 20 0.00 6 8888 8 How can you explain occurence of stable real exchange rate while the nominal exchange rate accelaretly depreciates between 1996 - 1999. 60-8661 SO-8661 1O-8661 60-L661 sO-L661 so-9661 60-5661 1995-05 1993-09 1993-05 to E661 60-2661 1992-05 TO-Z661 TO-1661

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter31: Open-Economy Macroeconomics: Basic Concepts

Section31.2: The Price For International transaction: Real And Nominal Exchange Rate

Problem 2QQ

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