The price of foreign goods in terms of domestic goods is called

Question

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The real exchange rate measures the price of foreign goods in terms of domestic goods, taking into account inflation in both countries. Choice B, the balance of trade, refers to the difference between a country's exports and imports. Choice C, the trade-weighted exchange rate, is a measure of the value of a country's currency against a basket of other currencies, taking into account the importance of trade with each country. Choice D, purchasing parity, refers to the idea that identical goods should have the same price in different countries when expressed in a common currency, taking into account the different levels of prices and incomes in each country.

The Price of Foreign Goods in Terms of Domestic Goods