Assuming the United States is the "domestic" country,if the real exchange rate between the United States and France increases from 1.5 to 1.8

Question

Quizplus · Accepted Answer

An increase in the real exchange rate from 1.5 to 1.8 indicates that a dollar can now buy 1.8 units of goods in France compared to the previous 1.5 units. This implies that the U.S goods have become relatively more expensive compared to the French goods. The percentage change in the real exchange rate is (1.8-1.5)/1.5 * 100 = 20%. Therefore, the prices of U.S goods and services have increased by 20% relative to France.

Assuming the United States Is the "Domestic" Country,if the Real