1. The Exchange Rate and Net Exports (a) Suppose the euro/pound exchange rate on Monday is 1.13 and on the following Friday is 1.15. What is the nominal exchange rate of euro on Monday and on Friday? Has the pound appreciated or depreciated during the week? Has the euro appreciated or depreciated during the week? (b) Suppose the euro/pound exchange rate on Monday is 1.13 and on the following Friday is 1.10. What is the nominal exchange rate of euro on Monday and on Friday? Has the pound appreciated or depreciated during the week? Has the euro appreciated or depreciated during the week? (c) Suppose a German bottle of wine (foreign good) costs 20. Calculate the pound price of the German bottle of wine for each of the following euro/pound exchange rate: 1.10; 1.13, and 1.15. What happens to the price of the foreign goods measured in units of domestic currency? (d) Suppose a UK. bottle of wine (domestic good) costs 10. Calculate the euro price of the UK. bottle of wine for each of the following euro/pound exchange rate: 1.10; 1.13, and 1.15. What happens to the price of the domestic goods measured in units of foreign currency? (e) Using your results from points (c) and (d), make a conclusion about the inuence of the changes in the nominal exchange rate on exports and imports. (f) Calculate the real exchange rate for the bottle of wine at each of the three euro/pound nominal exchange rates. What happens to the competitiveness of domestic goods in the world goods markets as the nominal exchange rate increases? as the nominal exchange rate decreases? Explain your