A Depreciation of the Real Exchange Rate (As Defined in the Australian

question 22

Multiple Choice

A depreciation of the real exchange rate (as defined in the Australian model) means that the:

• A) price of tradables rises relative to the price of nontradables.
• B) price of tradables fall relative to the price of nontradables.
• C) official exchange rate (defined as local currency per unit of foreign currency) falls.
• D) official exchange rate rises more slowly than the average price of nontradables.

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