CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

Which one(s) is (are) true?

I. The real exchange rate can be defined as the nominal exchange rate that takes the inflation differentials among countries into account.
II. An increase in the real exchange rate implies a reduction in the relative purchasing power of the domestic currency.
Correct Answer: Both statements are true.

The real exchange rate measures the relative purchasing power of the currencies.

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