By how much does the real, bilateral exchange rate change when the nominal, bilateral exchange rate changes from $1.40/£ to $1.60/£, the U.S. tradable basket from $2,100 to $2,200 and the British tradable basket from £1,500 to £1,600?
a. The real exchange rate rises by 16.35%.
b. The real exchange rate rises by 3.1%
c. The real exchange rate falls by 3.1%
d. The real exchange rate falls by 10.8%
e. The real exchange rate rises by 12.5%.
.A
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