7. Question 7 of Chapter 20 in the textbook. (7th edition, Real and nominal exchange rates for Russia and China). 7. Real and nominal exchange rates for Russia and China Russia and China are two of the largest trading partners and exporters to the European Union. The database of the European Central Bank provides direct quotations of foreign currencies against the euro, which they refer to as the "Euro foreign exchange reference rates\". Download the exchange rates for each of the Russian ruble (RUB) per euro and the Chinese yuans per euro for the last 10 years. a. The exchange rate is defined as the number of Russian rubles per one euro and the number of Chinese yuans per one euro. Redefine the exchange rates as the number of euro cents per rubles and the number of euro cents per yuan. Who does this direct quote of exchange rates benefit? b. Download and prepare charts depicting exchange rates ofthe euro against each of the ruble and yuan. Compare and contrast the behavior of each of the ruble and the yuan against the euro. Do you see a period when either of the ruble or lira is pegged? Do you observe a general trend of appreciation or depreciation of the euro against the two currencies? Which country/countries benefit from the changes in the exchange rate? c. Why do countries resort to devaluing their domestic currencies? When does a depreciated currency lead to inflation? How do inflation measures help to differentiate between nominal exchange rates and real exchange rates? Check the inflation rate of Russia and the EU for last year. Do you expect the real exchange rate between the ruble and the euro to be higher or lower than the nominal exchange rate? Explain your