An increase in the real exchange rate reflects _______ of the home currency, implying that the home country will have _______.[Hint: see page 19 of lecture 3A, question 4 of In-class Quiz - Week 4B]The CNB gives a brief introductionLinks to an external site. to the terminology regarding nominal vs. real exchange rates.Group of answer choicesa real depreciation; more exports and less importsa real appreciation; more exports and less importsa real appreciation; more imports and less exportsa real depreciation; more imports and less exports

Suppose that the price level in the Foreign country remains constant and so does the nominal exchange rate.If the price level in the Home country falls,  _____________Group of answer choicesthe Home currency is undervalued.the Home currency is overvalued.the Home currency has a real appreciation.the Home country will export more to and import less from the Foreign country.

How does a significant increase in a country's real exchange rate affect the competitiveness of domestic goods internationally?A.Domestic goods become more competitive internationallyB.Domestic goods become less competitive internationallyC.Unemployment rate decreases substantially

Explain the interrelations among nominal exchange rate, real exchange rate andpurchasing power parity exchange rate.

An increase in the real exchange rate indicates that: Group of answer choices foreign goods are now relatively cheaper. foreign goods are now relatively more expensive. domestic goods are now relatively more expensive. both a. and c. are correct

Year-to-year movements in real exchange rates between two countries with fixed nominal exchange ratesGroup of answer choiceschanges in relative rates of inflation.changes in relative growth rates of output.changes in relative net exportsnone of the above