homework help

The Real Exchange Rate

Personalized homework help for all major subjects.

Order confidently with our risk free, 14-day money-back guarantee.

  • ✔️ No sign-up required
  • | 🔒 100% Confidential

Our Expert Writers

We proudly boast a team of expert professionals with verified academic credentials, selected for their proven skills and flexibility through a strict process.

Engage with experts from the top universities across the globe.

Submit Your Homework

Let our experts help you with your college homework

Please enable JavaScript in your browser to complete this form.

Benefits & Guarantees

plagiarism free policy

Plagiarism free

plagiarism free policy

Strictly confidential

plagiarism free policy

On-time delivery

plagiarism free policy

Affordable pricing

plagiarism free policy

Unlimited revisions

plagiarism free policy

24/7 Support

The value of real GDP of other countries in comparison to a unit of the buys of the real GDP of America is real rate of exchange. Hence it is the value which is reached on comparing the value of commodities and services of America against that of other countries. The formula which can be applied to find the real exchange rate is RER= (E X P)/P*

This equation can be better understood with an example. Taking the Indian rupee as the currency to compare with the American dollar, the equation stands as follows.  E is the value do the rupee per dollar, P is the price level of America, P* is the price level at India. The value which is attained after calculation will be real rate of exchange. Therefore if the calculations need to be further analyzed an example can be used like if a commodity is taken up in this context, for example if it is assumed that the exchange rate or E is 100 rupees per dollar, the price of software in America is $150 so the P is $150 and the P* is set out at 5000. After calculation one chip is equal to here iPods.

The short run

On a short term basis the change in nominal exchange rate brings about alterations in the value of real rate of exchange. Taking India and America as examples again there is no guarantees that a change in prices or price level occurs at each instance that exchange rate alter. Thus changes in real rate of exchange only impact on a short term basis, and are limited to change in import demands and quantity of exports which are supplied.

The long run

Situations undergo rapid change when times shift from the short to long run. Here the nominal exchange rate and the real rate of exchange are fixed simultaneously and a shift in the nominal value does not affect real rate of exchange. Demand and supply for products deter mine real rate of exchange. There is no alternative for this and only when there is a real fluctuation in the rate of demand and supply will the exchange rate change. Similarly based on this equation the relative price levels that help stipulate an exchange rate is determined.

As per the quantity theory of money as explained in chapter 8 there is a change in exchange rate on appreciation of money. The quantity theory uniformly applies to all countries therefore an increase in price levels in Ukraine lead to a rise in exchange rate in Ukraine, while an increase of price in China leads to rise of exchange rate in the nation-state. If the exchange rate is given then fluctuations of the quantity of money alter not just price levels but exchange rates too.  To understand this better one can go back to the example of India and America.

Suppose the value of the Indian rupee was raised from 100 to 200 would it change the equation of 3 iPods to software? The answer is no, because the real exchange value remains unaltered. Now provided that the two countries had the capacity to create goods which were identical, like for example if both India and America created software then the real rate of exchange would over a period of time become equal to 1. Even though these examples have been stated assuming that each country produces just one product, in reality there is an overlap.

However it does not change the fact that the real GDP of one country stands different from that of another country. Hence if the GDP is not similar in two countries than the real rate of exchange is also constantly under change and not equal to 1.  This means that rate changes over time. This again reinstates that the goods and services which are produced by different countries and the demand which they create are instrumental in determining real rate of exchange. Also the changes in this rate are undertaken as a result of fluctuation of the demands.


Links of Previous Main Topic:-

Links of Next Macroeconomics Topics:-

Your Price: $11.00 $10.00

Pricing may change based on requirements

Descriptive text for the image

Get Homework Help In

Maths and Statistics


Humanities & Arts


Essay Writing

How Our Homework Service Works

FAQ number 1

Share your requirements

FAQ number 2

Make secure payment

FAQ number 3

Get homework answers

FAQ - Frequently Asked Questions

Discover quick answers in our FAQ, covering the most common customer questions about our homework help service.

Is your homework service confidential?


Absolutely! Confidentiality is one of the basic guarantees of our service at MyHomeworkHelp.com.

When our customers make their homework orders, they know their information remains 100% confidential.

Even your homework writer will not be provided with your personal details. So, when you hire a professional homework helper on our website, rest assured that your information will remain private and safe.

For a comprehensive understanding of how we protect your privacy, please refer to our Privacy Policy.

Who will help me with my homework?


We work with subject experts from all over the world. We hire them with the help of complex tests in the disciplines of their expertise. We also verify the IDs and academic transcripts of our homework writers to be sure that our experts have a bachelor's or master’s or a PhD degree. This is how we can be sure of the proficiency of our panel of experts who will help you with your homework.

Is it legal to ask for help with homework?


Seeking homework help is perfectly fine and shows your proactive approach to overcoming challenges. But it's important to use our homework service to enhance your understanding, not to replace your own efforts.

Our homework service offers original solutions for personal use, including:

  • Generating ideas or arguments for your research.
  • Deepening your subject comprehension.
  • Direct citation, with proper referencing.

However, it's crucial to avoid plagiarism by not submitting our work as your own. Make sure to check your institution's academic integrity policies before using our services. Our goal is to support your educational journey in a responsible and beneficial way. Refer our honor code for more details.

Is myhomeworkhelp.com legit?


Yes, myhomeworkhelp.com is completely legitimate. We've been successfully connecting students with top experts worldwide since 2012, offering direct, secure communication for a seamless learning experience. With over thousands of students helped and a commitment to innovative, effective education tools, we're dedicated to making learning easier and more accessible for everyone.

You can read our reviews here on Trustpilot and Sitejabber (Independent, verified reviews from buying customers) like you!

Is there a possibility of plagiarism in my completed order?


Unlike our competitors who use cheap and ineffective in -house plagiarism software, MyHomeworkHelp.com uses credible software to check your homework solution originality. We guarantee that your paper will pass TurnItIn checks with a low percentage of similarity. In addition, we also check submitted papers for ai-content using Originality.ai.

You will receive a complemantary plagiarism free report with your completed order.

What makes you one of the best homework help website?


We are not number 1 (yet!). We're an independent, bootstrapped business standing up to Big EdTech for last 12 years. So it means a lot that folks like you are willing to consider our services for your educational needs.

Myhomework Help is recognized as one of the premier websites for homework answers for three key reasons.

  1. Firstly, we pride ourselves on the expertise and qualifications of our tutors/experts, who are selected through a rigorous vetting process to ensure they can provide best academic assistance across a wide range of subjects.
  2. Secondly, our response time to student inquiries is fast (as early as few minutes), reflecting our understanding of the importance of timely support in an academic setting.
  3. Lastly, we keep our pricing very student friendly. Our aim is to provide the best learning experience to students like yourself without burning a hole in your pockets.