The Real Exchange Rate Can Be Decomposed into Two Parts,the

question 10

Multiple Choice

The real exchange rate can be decomposed into two parts,the __________ and the __________.

• A)nominal exchange rate;ratio of the domestic price level to the world price level
• B)nominal exchange rate;the difference between the domestic and foreign interest rate
• C)interest rate differential;the difference between the domestic and foreign inflation rate
• D)nominal exchange rate;ratio of the price of exported goods to imported goods
• E)interest rate differential;ratio of the domestic price level to the world price level

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