If the Chinese nominal exchange rate (foreign currency per Chinese Yuan) does not change, but prices rise slower in China than in all other countries, then the Chinese real exchange rate
A)does not change.
B)falls.
C)rises.
D)cannot be determined without more information.

Question

Quizplus · Accepted Answer

If prices rise slower in China than in other countries, the purchasing power of the Chinese Yuan increases relative to other currencies, causing the real exchange rate to fall.

If the Chinese Nominal Exchange Rate (Foreign Currency Per Chinese