The following Table describes the evolution of the domestic price level (P), the foreign price level (P) and the nominal exchange rate (E) for a hypothetical open economy, between 2011 and 2015. (a) Fill the Table by calculating in each year the domestic inflation rate (), the foreign inflation rate () and the real exchange rate (). exchange rate to the third decimal point). In this economy, the real exchange rate is , because the domestic price level is increasing the foreign price level. This means the price of domestic goods relative to foreign goods is . This has a effect on demand for domestic goods. We can represent this as a the curve of the domestic economy