Choose the correct statements about the real exchange rate. 1.The real exchange rate is a measure of how much of one money exchanges for a unit of another money.
2.The real exchange rate is the value of the Canadian dollar expressed in units of foreign currency per Canadian
3.The real exchange rate is the relative price of Canadian- produced goods and services to foreign- produced goo and services.
4.The real exchange rate is a measure of the quantity of the real GDP of other countries that we get for a unit of Canadian real GDP.
A)Statements 2 and 3 are correct.
B)Statements 3 and 4 are correct.
C)Statements 2 and 4 are correct.
D)Statements 1 and 3 are correct.
E)Statements 1 and 2 are correct.

Question

Quizplus · Accepted Answer

The real exchange rate is the relative price of Canadian-produced goods and services to foreign-produced goods and services, which is correctly stated in statement 3. It is also a measure of the quantity of the real GDP of other countries that we get for a unit of Canadian real GDP, which is stated in statement 4. Statement 1 is incorrect because the real exchange rate is not a measure of how much of one money exchanges for a unit of another money. Statement 2 is incorrect because it is the opposite of the correct definition of the real exchange rate.

Choose the Correct Statements About the Real Exchange Rate