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4 points Le denotes the nominal exchange rate between the U.S. dollar and Japanese yen. show that an increase in the Japan's real exchange rate,
4 points Le denotes the nominal exchange rate between the U.S. dollar and Japanese yen. show that an increase in the Japan's real exchange rate, | Sreal-l , (say over one year time period) will make Japan less competitive in international trade with U.S. and lowers the cost of U.S. goods for Japanese. Use a numerical example to support your answers. (Hint: Assume a constant nominal exchange rate in two periods, assume CPls Of 100 for both counties at initial time, assume different CPls for terminal period)
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