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Question
Which of the measures the value of currency against a basket of other currencies?
Which of the measures the value of currency against a basket of other currencies?
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Solution
The correct option is C Real Effect Exchange Rate
The real effective exchange rate (REER) is the weighted average of a country's relative to an index or basket of other major currencies,adjusted for the effects of inflation.The weights are determined by comparing the relative trade balance of a country's currency against each country within the index.
The real effective exchange rate (REER) is the weighted average of a country's relative to an index or basket of other major currencies,adjusted for the effects of inflation.The weights are determined by comparing the relative trade balance of a country's currency against each country within the index.
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