All of the following statements are true about the real exchange rate, given by the relation = , EXCEPT
A) a greater change in P (domestic price) compared to a change in (foreign price) necessitates a rise in the nominal rate, , to keep the real rate unchanged.
B) a pegged exchange rate system requires tight control of the money supply.
C) there is a one-to-one correspondence between the real and nominal exchange rates.
D) an expansionary monetary policy raises the real exchange rate.
E) the real exchange rate would be the same as the nominal exchange rate only if the difference between domestic and foreign inflation rates is zero.
C
You might also like to view...
As residents of developing countries increase their chocolate consumption, the increased production of cocoa results in
A) increased opportunity cost of cocoa production. B) decreased opportunity cost of cocoa production. C) no change in production of other goods and services. D) increased production of other goods and services.
Who among the following is the most likely to invest in human capital?
A) A person with a low rate of time preference B) A person with a high rate of time preference C) A person with no time preference D) None of the above.