The Macroeconomics of Open Economies
The Macroeconomics of Open Economies
◦ Assume the exchange rate between the Japanese yen and the euro is
80 yen to one euro.
◦ One euro trades for 80 yen.
N o m in a l e x c h a n g e ra te D o m e s tic p ric e
R e a l e x c h a n g e ra te =
F o re ig n p ric e