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b. Calculate the real exchange rate between Germany and the United States using the formula XRDMIS X CPIU.S. CPI GER R= c. Create a graph that includes both the real and the nominal exchange rate. Do the two variables move together?

b. Calculate the real exchange rate between Germany and the United States using the formula XRDMIS X CPIU.S. CPI GER R= c. Create a graph that includes both the real and the nominal exchange rate. Do the two variables move together?

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter19: The Macroeconomic Perspective
Section: Chapter Questions
Problem 25CTQ: Cross country comparisons of GDP per capita typically use purchasing power parity equivalent...
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Please answer b and c using the information from the tables. 

United States Australia Austria Belgium Canada Denmark France Germany b. Calculate the real exchange rate between Germany and the United States using the formula XRDM/S X CPIU.S. CPI, Table 3. Consumer Price Indexes (CPI), 16 countries, 1999-2012 Annual indexes: 1982-84 = 100 Italy Japan Netherlands Norway Spain Sweden Switzerland United Kingdom R= GER c. Create a graph that includes both the real and the nominal exchange rate. Do the two variables move together? 2012 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 166.6 172.2 177.1 179.9 184.0 188.9 195.3 201.6 207.3 215.3 214.5 218.1 224.9 229.6 197.0 205.7 214.8 221.2 227.2 232.6 238.8 247.3 253.1 264.1 268.8 276.6 285.8 290.8 147.9 151.4 155.4 158.2 160.3 163.6 167.4 169.9 173.6 179.1 180.0 183.3 189.3 194.0 148.3 152.1 155.8 158.4 160.9 164.3 168.8 171.9 175.0 182.9 182.8 186.8 193.4 198.9 160.5 164.9 169.0 172.8 177.6 180.9 184.9 188.5 192.7 197.2 197.7 201.3 207.2 210.3 162.0 166.8 170.7 174.8 178.5 180.5 183.8 187.3 190.5 197.0 199.6 204.2 209.8 214.9 155.0 157.7 160.3 163.4 166.8 170.3 173.4 176.2 178.9 183.9 184.1 186.9 190.8 194.6 140.0 142.0 144.8 146.9 148.5 150.9 153.2 155.7 159.2 163.3 163.9 165.8 169.6 226.3 232.1 238.5 244.5 251.0 256.6 261.5 267.1 272.0 281.1 283.3 287.7 295.7 121.8 121.0 120.1 119.0 118.7 118.7 118.3 118.7 118.7 120.3 118.7 117.8 117.5 137.0 140.2 146.1 150.9 154.0 156.0 158.6 160.4 163.0 167.1 169.0 171.2 175.2 186.6 192.4 198.2 200.8 205.7 206.6 209.9 214.7 216.3 224.5 229.2 234.9 237.8 239.6 234.1 242.1 250.8 259.6 267.5 275.6 284.9 294.9 303.1 315.5 314.6 320.2 330.5 338.6 195.1 196.9 201.6 206.0 209.9 210.7 211.7 214.5 219.3 226.8 225.7 228.3 235.1 237.2 143.8 146.1 147.5 148.5 149.4 150.6 152.5 154.1 155.2 158.9 158.1 159.2 159.7 158.5 194.3 200.1 203.6 207.0 213.0 219.4 225.6 232.8 242.7 252.4 285.2 173.0 304.6 117.5 179.5 251.1 262.7 276.3
Transcribed Image Text:United States Australia Austria Belgium Canada Denmark France Germany b. Calculate the real exchange rate between Germany and the United States using the formula XRDM/S X CPIU.S. CPI, Table 3. Consumer Price Indexes (CPI), 16 countries, 1999-2012 Annual indexes: 1982-84 = 100 Italy Japan Netherlands Norway Spain Sweden Switzerland United Kingdom R= GER c. Create a graph that includes both the real and the nominal exchange rate. Do the two variables move together? 2012 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 166.6 172.2 177.1 179.9 184.0 188.9 195.3 201.6 207.3 215.3 214.5 218.1 224.9 229.6 197.0 205.7 214.8 221.2 227.2 232.6 238.8 247.3 253.1 264.1 268.8 276.6 285.8 290.8 147.9 151.4 155.4 158.2 160.3 163.6 167.4 169.9 173.6 179.1 180.0 183.3 189.3 194.0 148.3 152.1 155.8 158.4 160.9 164.3 168.8 171.9 175.0 182.9 182.8 186.8 193.4 198.9 160.5 164.9 169.0 172.8 177.6 180.9 184.9 188.5 192.7 197.2 197.7 201.3 207.2 210.3 162.0 166.8 170.7 174.8 178.5 180.5 183.8 187.3 190.5 197.0 199.6 204.2 209.8 214.9 155.0 157.7 160.3 163.4 166.8 170.3 173.4 176.2 178.9 183.9 184.1 186.9 190.8 194.6 140.0 142.0 144.8 146.9 148.5 150.9 153.2 155.7 159.2 163.3 163.9 165.8 169.6 226.3 232.1 238.5 244.5 251.0 256.6 261.5 267.1 272.0 281.1 283.3 287.7 295.7 121.8 121.0 120.1 119.0 118.7 118.7 118.3 118.7 118.7 120.3 118.7 117.8 117.5 137.0 140.2 146.1 150.9 154.0 156.0 158.6 160.4 163.0 167.1 169.0 171.2 175.2 186.6 192.4 198.2 200.8 205.7 206.6 209.9 214.7 216.3 224.5 229.2 234.9 237.8 239.6 234.1 242.1 250.8 259.6 267.5 275.6 284.9 294.9 303.1 315.5 314.6 320.2 330.5 338.6 195.1 196.9 201.6 206.0 209.9 210.7 211.7 214.5 219.3 226.8 225.7 228.3 235.1 237.2 143.8 146.1 147.5 148.5 149.4 150.6 152.5 154.1 155.2 158.9 158.1 159.2 159.7 158.5 194.3 200.1 203.6 207.0 213.0 219.4 225.6 232.8 242.7 252.4 285.2 173.0 304.6 117.5 179.5 251.1 262.7 276.3
FRED German Deutsche Marks to One U.S. Dollar 2.3 2.2 2.1 2.0 1.9 1.8 1.7 1.6 Germany / U.S. Foreign Exchange Rate (DISCONTINUED) May 1999 Sep 1999 Jan 2000 Source: Federal Reserve Bank of St. Louis May 2000 1985 Sep 2000 1990 Jan 2001 May 2001 1995 fred.stlouisfed.org Sep 2001
Transcribed Image Text:FRED German Deutsche Marks to One U.S. Dollar 2.3 2.2 2.1 2.0 1.9 1.8 1.7 1.6 Germany / U.S. Foreign Exchange Rate (DISCONTINUED) May 1999 Sep 1999 Jan 2000 Source: Federal Reserve Bank of St. Louis May 2000 1985 Sep 2000 1990 Jan 2001 May 2001 1995 fred.stlouisfed.org Sep 2001
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