All of the Following Statements Are True About the Real

question 18

Multiple Choice

All of the following statements are true about the real exchange rate, = ,except

• A)a greater change in P (domestic price)compared to a change in P* (foreign price)necessitates a rise in the nominal rate, Rn, to keep the real rate unchanged.
• B)a pegged exchange rate system requires tight control of the money supply.
• C)there is a one-to-one correspondence between the real and nominal exchange rates.
• D)an expansionary monetary policy raises the real exchange rate.

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