Choose the correct statements about the real exchange rate. 1. The real exchange rate is a measure of how much of one money exchanges for a unit of another money.
2. The real exchange rate is the value of the Canadian dollar expressed in units of foreign currency per Canadian dollar.
3. The real exchange rate is the relative price of Canadian-produced goods and services to foreign-produced goods and services.
4. The real exchange rate is a measure of the quantity of the real GDP of other countries that we get for a unit of Canadian real GDP.
A)Statements 1 and 2 are correct.
B)Statements 2 and 4 are correct.
C)Statements 1 and 3 are correct.
D)Statements 3 and 4 are correct.
E)Statements 2 and 3 are correct.

Question

Quizplus · Accepted Answer

The real exchange rate measures the relative price of domestic goods to foreign goods (statement 3) and reflects the quantity of foreign real GDP that can be exchanged for a unit of domestic real GDP (statement 4).

Choose the Correct Statements About the Real Exchange Rate