Suppose the Price Level in Canada (P) and the Nominal

question 130

Essay

Suppose the price level in Canada (P) and the nominal exchange rate (e) between the Canadian dollar and the foreign currency remain the same, while the price level abroad increases from P₁* to P₂*. Let the real exchange rate be X. What is the percentage change in the real exchange rate?

---

Definitions:

Probability

The likelihood or chance of an event occurring, expressed as a number between 0 and 1.

Parameter Data

Data or values that define or control the behavior of a mathematical function or system.

Nominal Data

This data type categorizes variables without a natural order or ranking among the categories.

Ordinal Data

A type of categorical data in which the order of values is significant, but the differences between values are not necessarily consistent.