Macroeconomics

Learn the toughest concepts covered in your Macroeconomics class with step-by-step video tutorials and practice problems.

Exchange Rates

Exchange Rates: Nominal and Real

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Nominal and Real Exchange Rates

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Problem

The exchange rate between the USD and GBP is currently $1.61 = 1 GBP. If the price level in the US is 108 and the price level in the United Kingdom is 114, what is the real exchange rate?