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Basic Question 3 of 12
Which one(s) is (are) true?
II. An increase in the real exchange rate implies a reduction in the relative purchasing power of the domestic currency.
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.
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Learning Outcome Statements
describe the foreign exchange market, including its functions and participants, distinguish between nominal and real exchange rates, and calculate and interpret the percentage change in a currency relative to another currency
CFA® 2024 Level I Curriculum, Volume 1, Module 7.