1) Using the following symbols, write an expression for the U.S. economy’s real exchange rate: • e, the nominal exchange rate; the number of units of foreign currency needed to buy $1. • P, the price...

1) Using the following symbols, write an expression for the U.S. economy’s real exchange rate:
• e, the nominal exchange rate; the number of units of foreign currency needed to buy $1.
• P, the price level of goods and services in the U.S., expressed in dollars (the GDP deflator)
• P*, the price level of goods and services produced in a foreign country, expressed in units of
its currency (the foreign GDP deflator).
The real exchange rate, E = ____________________