2. Initially, PH = 40 CH, PF = 60 CF and E= 2 CH/CF. Then, they changed to PH = 30 CH, PF = 20 cF and E = 1.5 CH/CF. So, the real exchange rate changed from the initial value to the new value. 2.a. Choose the correct statement from below. A. The new real exchange rate is 3, and Home currency real-depreciated. B. The initial real exchange rate is 3, and Home currency real-depreciated. C. The PPP holds with the new real exchange rate, and Home currency real-appreciated. D. The PPP held with the initial real exchange rate, and Home currency real-appreciated.

2. Initially, PH = 40 CH, PF = 60 CF and E= 2 CH/CF. Then, they changed to PH = 30 CH, PF = 20 cF and E = 1.5 CH/CF. So, the real exchange rate changed from the initial value to the new value. 2.a. Choose the correct statement from below. A. The new real exchange rate is 3, and Home currency real-depreciated. B. The initial real exchange rate is 3, and Home currency real-depreciated. C. The PPP holds with the new real exchange rate, and Home currency real-appreciated. D. The PPP held with the initial real exchange rate, and Home currency real-appreciated.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 8PA

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