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The Real Exchange Rate Between Two Currencies Measures

Question 1

Multiple Choice

The real exchange rate between two currencies measures:


A) the relative price levels in these two countries.
B) how many units of one currency can be exchanged for one unit of the other currency.
C) how many units of representative baskets of goods and services in one country can be exchanged for one unit of the representative baskets of goods and services in the other country.
D) how much appreciation of one currency against the other currency.

Correct Answer:

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