At the start of the year, the exchange rate was $1.345/€. At the end of the year, the exchange rate is $1.272/€. If U.S. inflation was 5% and European inflation was 13%, what has been the nominal and real change in the value of the Euro (versus the USD)? Show work
Given your answer above, what has happened to European export industry competitiveness over the year? (looking for improved or weakened/deteriorated)
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