The Real Exchange Rate Is Equal to the ________

question 49

Multiple Choice

The real exchange rate is equal to the ________.

• A)nominal rate of exchange plus the domestic level of prices
• B)the nominal exchange rate minus the relevant foreign price level
• C)nominal exchange rate divided by the domestic plus foreign price levels
• D)nominal exchange rate times the domestic price level divided by the foreign price level

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Definitions:

Labor

The human effort, including physical and mental skills, employed in the production of goods and services within an economy.

Demand

The desire accompanied by the ability to pay for goods or services, determining the quantity that will be bought at a given price level.

Marginal Revenue Product

The additional revenue generated from the sale of one more unit of a good or service produced as the result of one more unit of an input.

Wage Rate

The fixed amount of compensation or payment received by an employee from an employer in exchange for work or services performed.