If the Chinese nominal exchange rate (foreign currency per Chinese Yuan) does not change, but prices rise slower in China than in all other countries, then the Chinese real exchange rate

A) does not change.
B) falls.
C) rises.
D) cannot be determined without more information.

Nominal Exchange Rate

The rate at which one country's currency can be exchanged for another country's currency without adjustment for inflation rates.

Real Exchange Rate

The rate at which two currencies can be exchanged, adjusted for inflation, indicating how much of a country's goods and services can be exchanged for those of another country.

Prices Rise

An increase in the cost of goods and services in an economy over a period of time.