If the inflation rate in Canada is 1 percent, the inflation rate in Mexico is 3

Question

If the inflation rate in Canada is 1 percent, the inflation rate in Mexico is 3 percent, and the nominal exchange rate in terms of Mexican pesos per Canadian dollar fell 4 percent, how much did the real exchange rate (in terms of Mexican goods per Canadian good) change? Answer +6 percent +2 percent -2 percent -6 percent If the inflation rate in Canada is 1 percent, the inflation rate in Mexico is 3 percent, and the nominal exchange rate in terms of Mexican pesos per Canadian dollar fell 4 percent, how much did the real exchange rate (in terms of Mexican goods per Canadian good) change? If the inflation rate in Canada is 1 percent, the inflation rate in Mexico is 3 percent, and the nominal exchange rate in terms of Mexican pesos per Canadian dollar fell 4 percent, how much did the real exchange rate (in terms of Mexican goods per Canadian good) change? +6 percent +2 percent -2 percent -6 percent +6 percent +2 percent -2 percent -6 percent

Explanation / Answer

-6 percent

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