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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

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.

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