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Suppose that at the start of 2015 the dollar/pound exchange rate was $2/1. One year...

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Finance

Suppose that at the start of 2015 the dollar/pound exchange rate was $2/1. One year later the exchange rate was $1.8/1. During the same period consumer prices had increased 30% in the UK and 17% in the US. What has happened to the nominal and the real exchange rate? Calculate the percentage changes and discuss the results obtained.

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