Which of the following affects real exchange rate directly?

CA Foundation · Business Economics · MTP · September 2026
Which of the following affects real exchange rate directly?
(A) A. Spot rate only
(B) B. Domestic interest rate
(C) C. Domestic and foreign price levels
(D) D. Central bank reserves

Suggested Answer and Working Notes:

Correct Answer: Option (C)

C. Domestic and foreign price levels

Topics: International Trade

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