Re: DSE 2012 paper discussion-Please join

Posted by Akshay Jain on Jun 05, 2014; 2:55pm
URL: http://discussion-forum.276.s1.nabble.com/DSE-2012-paper-discussion-Please-join-tp7590218p7591590.html

@sarawagisruti
the real ex rate (e) in this ques is defined as foreign goods/domestic goods. Then only if we divide IM by e we will get the value of imports in terms of domestic goods (X-IM/e => trade balance in terms of domestic goods)
accordingly e=EP/P* where E=foreign currency/domestic currency (say $/Rs)
so a rise in e is associated with an real appreciation of domestic currency and a fall in e is real depreciation of domestic currency.