Which of the following expressions represents the real exchange rate (s)?
A) EP*/P.
B) EP.
C) EP*.
D) EP/P*.
E) E.

Name: Which of the following expressions represents the real exchange rate (s)? A) EP*/P. B) EP. C) EP*. D) EP/P*. E) E.
Brand: Quizplus
Rating: 4.7 (34 reviews)

Question

Quizplus · Accepted Answer

The real exchange rate is defined as the nominal exchange rate (E) multiplied by the domestic price level (P) and divided by the foreign price level (P*): EP/P*. Choice D correctly represents this formula.

Which of the Following Expressions Represents the Real Exchange Rate