If all countries produce the same good (or the same set of goods)and goods are freely traded among countries,so that the real exchange rate equals one,then the relationship between domestic and foreign prices and the nominal exchange rate is

Question

Quizplus · Accepted Answer

When the real exchange rate equals one, the domestic price of a good is equal to the foreign price of the same good divided by the nominal exchange rate.

If All Countries Produce the Same Good (Or the Same