What is the real exchange rate equal to?
A) the relative price of domestic and foreign currency
B) the relative price of domestic and foreign goods
C) the ratio between the domestic and foreign interest rates
D) the nominal exchange rate minus the inflation rate

Question

Quizplus · Accepted Answer

The real exchange rate is defined as the relative price of domestic and foreign goods. It measures the purchasing power of a country's currency in relation to another country's currency, taking into account the prices of goods and services in each country.

What Is the Real Exchange Rate Equal To