1.

Suppose ittakes 1.25 yen to buy a rupee, and the price level in Japan is 3 andthe price level in India is 1.2. Calculate the real exchange ratebetween India and Japan (the price of Japanese goods in terms ofIndian goods). (Hint: First find out the nominal exchange rateas a price of yen in rupees).

Answer»

Suppose it
takes 1.25 yen to buy a rupee, and the price level in Japan is 3 and
the price level in India is 1.2. Calculate the real exchange rate
between India and Japan (the price of Japanese goods in terms of
Indian goods). (Hint: First find out the nominal exchange rate
as a price of yen in rupees).



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