Macn. × , Neosho County Commur × om/ibiscms/mod/ibis/view.php?id-3721312 nsas la

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Macn. × , Neosho County Commur × om/ibiscms/mod/ibis/view.php?id-3721312 nsas lail and Inmat It NCCC Home 11 Netflix Imported From IE D KanRoad 2014-59NC Sapling Learning In January 2012, one US dollar was worth 50.0 Indian rupees Suppose that over the next year the value of the Indían rupee decreases to 63.0 Indian rupees to one US dollar. Suppose also that the price level of all goods and services in India, as measured in rupees, falls 21.0%, so that the Indian price index falls from a value of 100 to 79.0. At the same time, suppose that the US price level increases by 6%. to 106. By what percentage did the value of the real exchange rate change over this period? Please give your answer to the nearest whole percentage point Number What will happen to the following as a result of the changes? America's consumption of Indian goods and services will likely. India's consumption of American goods and services will likely Increase Decrease O Previous Check Answer 0 Next Hint Exit

Explanation / Answer

Original real exchange rate = (Nominal exchange rate * Price level in US) / price level in India = (50*100)/100 = 50

Present exchange rate = (Nominal exchange rate * Price level in US) / price level in India = (63*106)/79 = 84.53

Change in real exchange rate = (84.53-50)/50 *100 = 69.06%

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