Holding everything else constant, the U.S. real exchange with Australia will increase if inflation is higher in the United States than in Australia.

Name: Holding everything else constant, the U.S. real exchange with Australia will increase if inflation is higher in the United States than in Australia.
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Question

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If inflation is higher in the U.S. than in Australia, the U.S. dollar will lose purchasing power relative to the Australian dollar, leading to an increase in the real exchange rate.

Holding Everything Else Constant, the U