a) Explain how real interest rate affects net exports b) A friend from the U.S. visited Ghana and exclaimed that cost of living for visitors to Ghana is much cheaper now than it was 2 years ago. According to your friend, 2 years ago, a dollar was equivalent to 5 cedis. Today, a dollar buys 7.5 cedis. Is your friend right or wrong, if inflation over the 2-year period is 25 percent in the U.S. and 100 percent in Ghana?

a) Explain how real interest rate affects net exports b) A friend from the U.S. visited Ghana and exclaimed that cost of living for visitors to Ghana is much cheaper now than it was 2 years ago. According to your friend, 2 years ago, a dollar was equivalent to 5 cedis. Today, a dollar buys 7.5 cedis. Is your friend right or wrong, if inflation over the 2-year period is 25 percent in the U.S. and 100 percent in Ghana?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 33P: The index number representing the price level changes from 110 to 115 in one year and then from 115...

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