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Definition of the real exchange rate

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Use the definition of the real exchange rate, shown below, to explain what would cause a real depreciation of the dollar against the euro. Discuss 3 factors, along with the reasoning behind each one.

Real exchange rate = ε = EP/P* where E= euro/$ (the nominal exchange rate). Use the definition of the real exchange rate, shown below, to explain what would cause a real depreciation of the dollar against the euro.

Discuss 3 factors, along with the reasoning behind each one.

Real exchange rate = ε = EP/P* where E= euro/$ (the nominal exchange rate)

Reference no: EM132550924

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