The nominal trade fee tells how plenty overseas foreign money may be exchanged for a unit of home foreign money.
The required details for nominal exchange rate in given paragraph
1. b. the Big Mac however now no longer the tall latte.
($1 = 0.eighty euro
So, Price of tall latte in euros have to be 4*0.8 = 3.2 euros which does now no longer identical 2.five euros.
Price of huge mac in euros have to be (4.five)*0.8 = 3.6 euros equals real fee of 3.6 euros.)
2. a. most effective the nominal trade fee depreciates.
(As US reports inflation, nominal trade fee will depreciate however actual trade fee will now no longer change.)
The nominal trade fee is the quantity of home foreign money had to buy overseas foreign money. In economics, the NEER is a trademark of a country's worldwide competitiveness in phrases of the overseas trade (forex) market.
Exchange fees are decided through factors, such as hobby fees, confidence, the contemporary account on stability of payments, monetary boom and relative inflation fees.
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