If the Nominal Exchange Rate Is E, the Domestic Price

question 55

Multiple Choice

If the nominal exchange rate is e, the domestic price is P and the foreign price is P*, then the real exchange rate is defined as:

• A)e + P/
• B)e(P*/P)
• C)P e(P/P*)
• D)e - P/P*

---

Definitions:

Sensitives

Individuals or entities that are highly responsive or susceptible to external stimuli or changes in their environment.

Entitleds

Individuals who believe they deserve special treatment or privileges, regardless of their actual accomplishments or contributions.

Equity

The concept of fairness or justice in the distribution of resources or treatment of individuals.

Sensitives

Individuals or groups that show a heightened awareness or response to certain stimuli or environments.