CFA Practice Question

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CFA Practice Question

The higher the real exchange rate, the ______ your relative purchasing power.

A. higher
B. lower
C. They are not related.
Correct Answer: B

The real exchange rate can be considered the real price you face to buy foreign goods and services.

User Contributed Comments 2

User Comment
vatsal92 As inflation increases, prices go up...and you end up buying less than before.
khalifa92 either way, as long as XR goes up purchasing power decreases
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