In the name of ALLAH, the most beneficient, the most merciful

Macroeconomics (ECO403)

Question (select most suitable option)

  Which of the following equations is correct?
Real exchange rate = (exchange rate + domestic price level) / foreign price level
Exchange rate = (real exchange rate × domestic price level) / foreign price level
Exchange rate = (nominal exchange rate × domestic price level) / foreign price level
Real exchange rate = (nominal exchange rate × domestic price level) / foreign price level