International Economics Assignment Example | Topics and Well Written Essays - 1250 words

International Economics - Assignment ExampleDepreciation add-ons operation and running costs of an organization, peculiarly if it has a lot of imports or outsourced employees.The real change over rate mingled with the United States and Europe is inclined by . Consider a scenario in which the nominal phrase reciprocation rate depreciates by 3%, slice the price level in Europe emergenced by 5% and in the United States, it goes up by 2%. What happens to the real exchange rate?In Munich a bratwurst costs 5 euros, a hot dog costs 4$ at Bostons Fenway Park. At an exchange rate of 1.05 $ per euro, what is the price of a bratwurst in terms of a hot dog? altogether else equal, how does this relative price change if the dollar depreciates to 1.25$ per euro? Compared with the initial situation, has a hot dog become to a greater extent or less expensive relative to a bratwurst?Spain and Germany trade a lot between each other. Germany is running an inflation low, but inflation and Spai n a deflation. Discuss what is expected to happen with the nominal and the real exchange rates between them.The nominal exchange rates of Germany will decrease eon the nominal exchange rates for Spain will increase. This is because an increase in commodity prices will cause an increase in the foreign income that is required to purchase local products. The vice versa is true for Spain where a decrease in the price of commodities will reduce the amount of income earned from foreign countries to buy local products.The real exchange rates of Germany will increase. This is because the real exchange rates appreciate an increase in product prices. On the other hand, the real exchange rates of Spain will decrease. This is because real exchange rates depreciate with an increase in product prices.