Regarding foreign exchange rates

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Reference no: EM131556878

Which of the following is INCORRECT regarding foreign exchange rates?

The changes in the nominal foreign exchange rate may give you false information about the real purchasing power of a currency.

The real exchange rate is the nominal exchange rate with inflation effects factored in.

From the U.S. perspective, a decrease in the direct quote of the nominal exchange rate between U.S. dollar and Euro indicates a relative appreciation of U.S. dollar against Euro.

From the U.S. perspective, an increase in the direct quote of the nominal exchange rate between U.S. dollar and Euro indicates a relative appreciation of U.S. dollar against Euro.

Reference no: EM131556878

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