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.

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