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2. Nominal Effective Exchange Rate Index. Explain how a nominal effective exchange rate index is constructed. 3. Real Effective Exchange Rate Index. What formula is

2.Nominal Effective Exchange Rate Index. Explain how a nominal effective exchange rate index is constructed.

3.Real Effective Exchange Rate Index. What formula is used to convert a nominal effective exchange rate index into a real effective exchange rate index?

4.Exchange Rate Pass-Through. Incomplete exchange rate pass-through is one reason that a countrys real effective exchange rate can deviate for lengthy periods from its purchasing power equilibrium level of 100. What is meant by the term exchange rate pass-through?

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