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Question 2 (i) Calculate the Nominal and Real Exchange Rate lndices for the dollar in periods 1 to 5 using period 1 as the base
Question 2 (i) Calculate the Nominal and Real Exchange Rate lndices for the dollar in periods 1 to 5 using period 1 as the base period. Show your calculations. (5 marks) Eurozone US Price Price Price Real Period l$ rate l$ Index Index Index I$ Index 1 1.10/$1 ? 100 100 ? 2 0.90/$1 ? 105 110 ? 3 1l$1 ? 115 120 ? 4 0.95/$1 ? 130 140 ? 5 1.20/$1 ? 135 145 ? (ii) Comment on the evolution of the real exchange rate of the dollar and what it implies for the United States competitiveness. (5 mark)
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