Question

why Pakistani nominal exchange rate declines, and prices rise faster abroad than in the Pakistan?​

Answer 1

Answer:

variables in determining nominal exchange rates in Pakistan. For this ... medium of exchange then a relative increase in domestic prices, ... If foreign tradables prices increase faster relative to domestic.

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Answer 2

If the dollar appreciates (the exchange rate increases), the relative price of domestic goods and services increases while the relative price of foreign goods and services falls. 1. The change in relative prices will decrease U.S. exports and increase its imports.