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One year ago, the spot exchange rate between USD and GBP was S - 1 $/= $1.50/Today- the spot rate is S 0 $/= $1.30/Inflation
One year ago, the spot exchange rate between USD and GBP was S - 1 $/= $1.50/Today- the spot rate is S 0 $/= $1.30/Inflation during the year was p $ = 2 percent and p = 3 percent in US and UK, respectively. What was the percentage change in the nominal value of the GBP? One year ago, what nominal exchange rate would you have predicted for today based on the difference in inflation rates? What was the percentage change in the real exchange rate, x o $/, during the year? What is the impact of such change in real exchange rate to UK's importers and exporters
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