From the point of view of United Stated Looking at Germany Real exchange rate a Price of german goods in terms ofU.s goods Real appreciation Price of U.S. goods in terms of Germany goods increases Equivalently Price of German goods in terms of U.S. goods decreases EauiⅤ alently Real exchange rate decreases: a t Real depreciation Price ofU. s goods in terms of Germany goods decreases Equivalently Price of german goods in terms ofu.s goods increases EauiⅤ alent y Real exchange rate increases: &+From the point of view of United Stated Looking at Germany Real exchange rate ε Price of German goods in terms of U.S.goods Real appreciation Price of U.S.goods in terms of Germany goods increases Equivalently: Price of German goods in terms of U.S. goods decreases Equivalently: Real exchange rate decreases: ε Real depreciation Price of U.S. goods in terms of Germany goods decreases Equivalently: Price of German goods in terms of U.S. goods increases Equivalently: Real exchange rate increases: ε