The real exchange rate:
A) expresses the value of goods in one country in terms of the same goods in another country.
B) is the nominal exchange rate adjusted for purchasing power parity.
C) uses the price level in each country to convert the exchange rate into a value that is in "real" terms.
D) All of these statements are true.

Question

Quizplus · Accepted Answer

The real exchange rate involves adjusting the nominal exchange rate for differences in price levels between countries, reflecting the value of goods in one country in terms of the same goods in another country, thus all statements are true.

The Real Exchange Rate