The domestic currency price of a representative domestic expenditure basket is
A)P,the domestic price level.
B)E,the nominal exchange rate.
C)P times E,the domestic price level times the domestic price level.
D)P ,the foreign price level.
E)P times E,the foreign price level times the nominal exchange rate.

Question

The domestic currency price of a representative domestic expenditure basket is
A)P,the domestic price level. 
B)E,the nominal exchange rate. 
C)P times E,the domestic price level times the domestic price level. 
D)P ,the foreign price level. 
E)P times E,the foreign price level times the nominal exchange rate.

Quizplus · Accepted Answer

The domestic currency price of a representative domestic expenditure basket is represented by the domestic price level (P). It is not affected by the nominal exchange rate, foreign price level, or their combination.

The Domestic Currency Price of a Representative Domestic Expenditure Basket