The Trade- Weighted Index (TWI) of the Exchange Rate

question 32

Multiple Choice

The trade- weighted index (TWI) of the exchange rate:

• A) is less relevant than bilateral rates when looking at the impact of the exchange rate on the economy.
• B) is set by the RBA and remains fixed until the government alters exchange rate policy.
• C) is composed of weights based on econometric estimates of exchange rate elasticities with the A$.
• D) measures the average value of the A$ against all overseas currencies.

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Definitions:

GDP

GDP, an indicator of a nation's economic health, is the overall value of all products and services produced within a country during a given timeframe.

GDP

The total market value of all goods and services produced within a country in a specific period, a broad indicator of economic performance.

Real GDP

Real Gross Domestic Product, which adjusts the GDP for inflation to show the actual worth of an economy's total production of goods and services within a year.

Real Terms

Refers to economic measures adjusted for inflation, enabling comparison of purchasing power across different times.