Other things the same, an increase in the foreign price level leads to an increase in the real exchange rate.

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Manjot Saini · Accepted Answer

Final Answer : False, Explanation :  An increase in the foreign price level, other things being equal, would decrease the real exchange rate, as the real exchange rate is the relative price of domestic goods in terms of foreign goods. Higher foreign prices make foreign goods more expensive relative to domestic goods.

Other things the same, an increase in the foreign price level leads to an increase in the real exchange rate.

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