The ________ exchange rate is the relative price of foreign goods in terms of domestic goods.
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The ________ exchange rate is the relative price of foreign goods in terms of domestic goods.
✓ Correct answer: d) Real
ExplanationReal exchange rate is the ratio of price level abroad and domestic price level where foreign price level gets converted into domestic currency units through the current nominal exchange rate.It is the ratio of the foreign price level and domestic price level multiplied by the nominal exchange rate.Nominal exchange rate is the price of foreign currency in terms of the domestic currency.Fixed exchange rate is also known as a pegged exchange rate in which the value of a currency is fixed against the value of another currency.Hence, the correct answer is “Real”.
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