Question

    The REER is used to measure the value of a specific currency in relation to an average group of major currencies. What does REER stand for?

    A Real Essential Exchange Rate Correct Answer Incorrect Answer
    B Rated Effective Exchange Rate Correct Answer Incorrect Answer
    C Real Effective Exchange Rate Correct Answer Incorrect Answer
    D Rounded Effective Exchange Rate Correct Answer Incorrect Answer
    E Rounded Essential Exchange Rate Correct Answer Incorrect Answer

    Solution

    The real effective exchange rate (REER) is the weighted average of a country's currency 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.

    Practice Next