a. Explain the difference between the real exchange rate and the nominal exchange rate.
b. If a Japanese car costs 500 000 yen, if a similar Canadian- produced car costs $10,000, and if a dollar can buy 100 yen, what are the nominal and real exchange rates?
c. Explain the relationship among saving, investment, and net foreign investment.
What is happening to Canada's real exchange rate in each of the following situations? Explain.
(i) The Canadian nominal exchange rate is unchanged, but prices rise faster in Canada than abroad.
(ii) The Canadian nominal exchange rate is unchanged, but prices rise faster abroad than in Canada.
(iii) The Canadian nominal exchange rate declines and prices are unchanged in Canada and abroad.
(iv) The Canadian nominal exchange rate declines and prices rise faster abroad than in Canada.