Real Exchange Rate (Definition)

"The real exchange rate between two countries is the relative cost of the common reference basket of goods, where the baskets' costs in the two countries are compared after conversion into a common numeraire." (p.200)

P1/P2 ↑　-> country 1 experiences a real appreciation
                -> country 2 experiences a real depreciation

Rogoff, Kenneth and Maurice Obstfeld. 1996. Foundations of International Macroeconomics. Cambridge, Massachusetts: MIT Press.