Question 2 (i) Calculate the Nominal and Real Exchange Rate Indices for the pound sterling in periods 1 to 5. (Show your workings in full) Period $/£rate Nominal $/£ Index US Price Index UK Price Index Real $/£ Index 1 $2.00/£1.00 ? 100 100 ? 2 $2.40/£1.00 ? 120 110 ? 3 $2.60/£1.00 ? 120 120 ? 4 $2.00/£1.00 ? 130 140 ? 5 $1.80/£1.00 ? 150 145 ? (5 marks) (ii) Comment on the price competitiveness of the UK economy over each of the periods,2, 3, 4 and 5. Then comment on the UKs competitiveness in period 5 compared to period 1.
Question 2 (i) Calculate the Nominal and Real Exchange Rate Indices for the pound sterling in periods 1 to 5. (Show your workings in full) Period $/£rate Nominal $/£ Index US Price Index UK Price Index Real $/£ Index 1 $2.00/£1.00 ? 100 100 ? 2 $2.40/£1.00 ? 120 110 ? 3 $2.60/£1.00 ? 120 120 ? 4 $2.00/£1.00 ? 130 140 ? 5 $1.80/£1.00 ? 150 145 ? (5 marks) (ii) Comment on the price competitiveness of the UK economy over each of the periods,2, 3, 4 and 5. Then comment on the UKs competitiveness in period 5 compared to period 1.
Principles of Macroeconomics (MindTap Course List)
7th Edition
ISBN:9781285165912
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Open-Economy Macroeconomics: Basic Concepts
Section: Chapter Questions
Problem 8PA
Related questions
Question
Question 2
(i) Calculate the Nominal and Real Exchange Rate Indices for the pound sterling in periods 1 to 5. (Show your workings in full)
|
Period |
$/£rate |
Nominal $/£ Index |
US Price Index |
UK Price Index |
Real $/£ Index |
|
1 |
$2.00/£1.00 |
? |
100 |
100 |
? |
|
2 |
$2.40/£1.00 |
? |
120 |
110 |
? |
|
3 |
$2.60/£1.00 |
? |
120 |
120 |
? |
|
4 |
$2.00/£1.00 |
? |
130 |
140 |
? |
|
5 |
$1.80/£1.00 |
? |
150 |
145 |
? |
(5 marks)
(ii) Comment on the price competitiveness of the UK economy over each of the periods,2, 3, 4 and 5. Then comment on the UKs competitiveness in period 5 compared to period 1.
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