The relative price of goods in two countries is known as the ________.

Question

Quizplus · Accepted Answer

The relative price of goods in two countries is known as the real exchange rate, which takes into account the inflation rates of each country. The nominal exchange rate is simply the rate at which one currency can be exchanged for another without considering inflation. The domestic price level and real interest rate are not directly related to the relative price of goods in different countries.

The Relative Price of Goods in Two Countries Is Known