Q $6$ and $Q7$ combined:

Q $6$: Today is May $24$th $2023.$

You are Chief $$conomist at Cornerstone Economics Inc, an economic research consulting company in Sydney,

Australia, with great views over Sydney harbour. Wow! I am jealous!

On May $24$th $2018($EXACTLY FIVE YEARS AGO$),$ the $($nominal$)$ spot exchange rate for the number of NZD per AUD

was $1\mathrm{.}1000.$

Today, on May $24$th $2023,$ the $($nominal$)$ spot exchange rate for the number of NZD per AUD is $1\mathrm{.}1200$

On May $24$th $2018,$ the Consumer Price Index in Australia was $100$ while on May $24$ th $2023($today$),$ it is $110\mathrm{.}0.$

On May $24$th $2018,$ the Consumer Price Index in New Zealand was $100$ while on May $24$th $2023($today$),$ it is $112\mathrm{.}0.$

Assume that the real exchange rate on May $24$ th $2018$ was normalised to be $1\mathrm{.}1000($i$.$e$.,$ the same as the $($nominal$)$

exchange rate$).$

Q $6$: Compute the real $($REPEAT REAL$)$ exchange for the number of NZD per AUD

on May $24$th $2023.$ Enter your answer to $4$ decimal places. Don't worry if Canvas appears not to accept the answer to

$4$ decimal places $($it does not internally even if$,$ for example, only one decimal place gets "displayed"$).$

Q$7$: Did relative PPP hold over the five years

from May $24$th $2018$ to May $24$th $2023?$ Pick the best choice.