Multiple Choice
If we let P = the domestic price of a basket of goods and Pf the foreign price of the same basket of goods, and Ɛ= the nominal exchange rate of U.S. $/foreign currency the real exchange rate is best expressed as:
A) P / Pf × Ɛ
B) Pf / P
C) Pf / P × Ɛ
D) Ɛ × P / Pf
Correct Answer:
Verified
Correct Answer:
Verified
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