Quelpr
2 marksBalance of Payments and Exchange Rates

CAPE Economics Unit 2 · 2014 · Paper 2 · Question 6(a)(ii)

Assume that the nominal exchange rate between Trinidad (TT) and Barbados (BBD) currency is TT 3 equivalent to BBD 1 and Barbados is the domestic country. Given that a bottle of wine costs TT 60 in Trinidad and BBD 20 in Barbados, calculate the real exchange rate.

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Other parts of this question

  1. 6(a)(i)Distinguish between 'nominal exchange rate' and 'real exchange rate'.[4 marks]
  2. 6(a)(iii)a)State the effect on the price of Jamaican goods relative to foreign goods.[1 mark]
  3. 6(a)(iii)b)State the effect on Jamaican imports.[1 mark]
  4. 6(a)(iii)c)State the effect on Jamaican exports.[1 mark]
  5. 6(b)Use the diagram below to explain the effect of an increase in demand for imported cars in Trinidad and Tobago on the demand for foreign exchange and the price…[4 marks]
  6. 6(c)Discuss TWO advantages and ONE disadvantage of globalization on developing countries.[12 marks]

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