Question
In a hypothetical world, between last year and this year, the CPI in Germany rose from 110 to 115 and the CPI in China rose
In a hypothetical world, between last year and this year, the CPI in Germany rose from 110 to 115 and the CPI in China rose from 85 to 100. Germany's currency unit, the Euro(EUR), was worth 0.85(EUR) per Canadian dollar last year and is worth 0.78(EUR) per Canadian dollar this year. China's currency unit, the Yuan(CNY), was worth 6.8(CNY) per Canadian dollar last year and is worth 6.68(CNY) per Canadian dollar this year.
a)Find the percentage change from last year to this year in Germany'snominalexchange rate with China (measured as # of Euros/1 China Yuan).
b)Find the percentage change from last year to this year in Germany'srealexchange rate with China. Again, assume that we are measuring the nominal exchange rate portion as the # of Euros/1 China Yuan.
c)Relative to China, do you expect Germany's exports to be helped or hurt by these changes in exchange rates?
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