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Exchange rates (nominal, real)

One year ago Polish zloty was PLN 3.8000/USD. Since then the sloty has fallen 14% against the dollar. Price levels in the US have not changed, but Polish price has gone up 7%
-what is the nominal exchange rate today?
-what should be the exchange rate today, based on relative PPP and assuming last year was normal?
-Did the zloty depreciate or appreciate in real terms, relative to the dollar, by what percentage?
-using last year as the base, what is the real exchange rate of zloty against today?

Solution Preview

-what is the nominal exchange rate today?

Since the zloty has depreciated by 14 %
(Current exchange rate - last year's exchange rate )/ last year's exchange rate= 14%
or Current exchange rate/ last year's exchange rate - 1= 14%
or Current exchange rate/ last year's exchange rate = 1.14
Last year's ...

Solution Summary

The solution calculates Nominal exchange rates, whether zloty has appreciated or depreciated against the US dollar, exchange rate that should prevail based on relative PPP and real exchange rate.

$2.19