Question

Suppose that the exchange rate of the Indian rupee appreciates by 10 per cent relative to the currencies of India’s trading partners. Over the same period, inflation in India is 8 percent compared to 3 percent inflation in the trading partners. What is the change in India’s real exchange rate? 

This question obtained (1) Marks: 
A 5 percent appreciation
B 10 percent appreciation
C 15 percent appreciation
D 5 percent appreciation
E 20 percent appreciation
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