Pearson eText Economics of Money, Banking and Financial Markets, The, Business School Edition -- Instant Access (Pearson+)
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Chapter 20, Problem 1DAP
To determine

The solutions to the following questions using the source of the St. Louis Federal Reserves FRED database about the data on the exchange rate of U.S. dollars per British pound (DEXUSUK), and a Mini Cooper price in London is £17,865 and in Boston, U.S. is $23,495:

  1. Use the most recent exchange rate available to calculate the real exchange rate of the London Mini per Boston Mini.
  2. Based on your answer to part (a), are Mini Coopers relatively more expensive in Boston or in London?
  3. What price in Boston pounds would make the Mini Cooper equally expensive in both locations, all else being equal?

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