In what context does the use of real exchange rates make the most sense?
a. For determining if one nation's real GDP has increased faster than another nation's real GDP.
b. For determining if one nation's nominal GDP has increased faster than another nation's nominal GDP.
c. For calculating whether to purchase foreign or domestic stocks and bonds.
d. For determining changes in a nation's relative international competitiveness.
e. For calculating the cost of buying foreign goods and services.
Question 2 - The real, effective exchange rate is:
a. The same as the nominal, effective exchange rate.
b. The value of one currency in terms of another currency.
c. The nominal, bilateral exchange rate adjusted for the international price levels of the two countries.
d. The weighted-average value of a currency relative to many foreign currencies.
e. The nominal, effective exchange rate adjusted for a nation's price level relative to many foreign countries' prices.
Question 3 - The real, bilateral exchange rate is the:
a. Weighted-average value of a currency relative to many foreign currencies.
b. Value of one currency in terms of another currency.
c. Nominal, bilateral exchange rate adjusted for the international price levels of the two countries.
d. Nominal, effective exchange rate adjusted for a nation's price level relative to many foreign countries' prices.
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