Question 2:7.5

A)Explain the differences between Nominal and Real Exchange Rate? What is Appreciation and Depreciation? Using the data given below, interpret the situation of exchange rate of BDT against Dollar over the last five year?

Year 2019 - 84.454,Year 2018 - 83.466, Year 2017 - 80.438, Year 2016 - 78.468, Year 2015 - 77.497

B)Solve the Following problem - $ 1 = 84.25 BDT, Price of one pizza in US is $5, and in Bangladesh is BDT600.

1. What is the price of a US pizza measured in Taka?

2. Calculate the real exchange rate measured as Bangladeshi pizza per US pizza?

3. What does your answer mean? Interpret your answer clearly?