As economies adjust to inflation, there is an adjustment of exchange rates to reflect the changed price level. This adjustment is called:
A) real exchange rates.
B) convergence.
C) adjustment costs.
D) revaluation.

Question

Quizplus · Accepted Answer

Real exchange rates adjust to reflect changes in price levels, providing a measure that accounts for inflation differences between countries.

As Economies Adjust to Inflation, There Is an Adjustment of Exchange