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Consider a bundle of consumer goods that costs 100 in the United States The same bundle of goods costs 300 in Malaysia Holding constant the
Consider a bundle of consumer goods that costs 100 in the United States The same bundle of goods costs 300 in Malaysia Holding constant the cost of the bundle in each country compute the real exchange rates that would result from the two nominal exchange rates in the following table Cost of Bundle in U S Dollars 100 100 Cost of Bundle in Malaysia Ringgit 300 300 Nominal Exchange Rate Ringgit per dollar 4 50 12 00 Real Exchange Rate Bundles of Malaysian goods per bundle of U S goods
Consider a bundle of consumer goods that costs 100 in the United States The same bundle of goods costs 300 in Malaysia Holding constant the cost of the bundle in each country compute the real exchange rates that would result from the two nominal exchange rates in the following table Cost of Bundle in U S Dollars 100 100 Cost of Bundle in Malaysia Ringgit 300 300 Nominal Exchange Rate Ringgit per dollar 4 50 12 00 Real Exchange Rate Bundles of Malaysian goods per bundle of U S goods
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