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Let S = 0.90, the current exchange rate $ / euro (0.9 $ / euro), P = 6 euros the level of prices of goods
Let S = 0.90, the current exchange rate $ / euro (0.9 $ / euro), P = 6 euros the level of prices of goods in the domestic economy expressed in the currency of the country P * = 4 $ the price level of its economy foreign currency in that country's currency. If domestic inflation increases by 5%, foreign inflation by 3% and the nominal exchange rate decreases by 5%. What is the real exchange rate R?
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