Explain Why the Changes We Observe in Nominal Exchange Rates

question 21

Essay

Explain why the changes we observe in nominal exchange rates in the short run must be due primarily to changes in the real exchange rate.

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Definitions:

Paid-in Capital

The amount of capital "paid in" by investors during common or preferred stock issuances, including the par value of the shares and amounts over par value.

Stock Dividend

A dividend payment to shareholders in the form of additional shares in the company, rather than cash.

Cash Dividend

A disbursement by a company to its shareholders, often from the profits earned.

Stock Dividend

A distribution of additional shares of a company's stock to its shareholders, usually in proportion to their existing holdings, instead of paying a cash dividend.