Real exchange rate in 2012

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Suppose that in 2012 the nominal exchange rate for U.S. dollars and British pounds is $1.4/pound. In addition, let us assume that the base year is 2010, at which consumer prices are set equal to 100. By 2012, the U.S. consumer prices increased to a level of 110, while British consumer prices increased to a level of 106. What was the real exchange rate in 2012?

Reference no: EM132726402

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