Changes in the Real Exchange Rate

question 49

Multiple Choice

Changes in the real exchange rate

• A) reflect changes in the purchasing power of one currency relative to the rest of the world.
• B) indicate changes in the prices of goods produced in one country relative to the rest of the world.
• C) are positive if domestic prices in one country climb relative to those in the rest of the world.
• D) can be caused by changes in either the domestic price index or the price index of goods produced and traded across the rest of the world.
• E) all of the above.

---

Definitions:

Autonomously

Acting independently or having the freedom to make one's own decisions.

Self-Determining

Having the power or capability to make decisions for oneself without external coercion.

Deliberations

The process of careful consideration or discussion aimed at reaching a decision or forming an opinion.

Personal Paternalism

The practice of limiting an individual's freedom or autonomy for their own good, usually within a personal or individualized context.