Year-to-year movements in real exchange rates between industrialized countries like the U.S.and Canada are caused mostly by
A)changes in relative rates of inflation.
B)changes in relative growth rates of output.
C)changes in quotas or tariffs.
D)changes in capital controls.
E) changes in nominal exchange rates.

Question

Quizplus · Accepted Answer

Year-to-year movements in real exchange rates are primarily influenced by changes in nominal exchange rates, as these reflect the relative price of currencies between countries.

Year-To-Year Movements in Real Exchange Rates Between Industrialized Countries Like