A fall in the real exchange rate is called
A)a real depreciation.
B)a real appreciation.
C)a real revaluation.
D)a real devaluation.

Question

Quizplus · Accepted Answer

A fall in the real exchange rate means that the value of domestic currency has decreased relative to foreign currency. This means that it takes more domestic currency to purchase the same amount of foreign currency. This is known as a real depreciation. Choice A is the only option that correctly describes this situation.

A Fall in the Real Exchange Rate Is Called