If the nominal exchange rate changes then the real exchange rate must also change.

Name: If the nominal exchange rate changes then the real exchange rate must also change.
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Question

Quizplus · Accepted Answer

The real exchange rate adjusts for differences in price levels between countries, so it's possible for the nominal exchange rate to change without a corresponding change in the real exchange rate if price levels in both countries change proportionately.

If the Nominal Exchange Rate Changes Then the Real Exchange