Based on the content presented in this chapter, answer what the following items request: a. Comment on the statement: “an increase in productivity causes the real exchange rate to appreciate.” b. What hypotheses must be satisfied for the real exchange rate parity to be verified?

Based on the content presented in this chapter, answer what the following items request: a. Comment on the statement: “an increase in productivity causes the real exchange rate to appreciate.” b. What hypotheses must be satisfied for the real exchange rate parity to be verified?

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section14.3: How Policies And Events Affect An Open Economy

Problem 3QQ

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Based on the content presented in this chapter, answer what the following items request:

a. Comment on the statement: “an increase in productivity causes the real exchange rate to appreciate.”

b. What hypotheses must be satisfied for the real exchange rate parity to be verified?

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