Question 5 When the real exchange rate appreciates, domestic goods become less expensive relative to foreign...
Question 5
When the real exchange rate appreciates, domestic goods become less expensive relative to foreign goods.
A. True
B. False
Question 6
A Honda SUV sells for $50,000 in the U.S. and 200,000 rubles in Russia. If purchasing-power parity holds, what is the nominal exchange rate (rubles per dollar)?
Homework Answers
/$ 5) When real exchange rate appraciates, what happens is that you would get more foreign currency per one unit of your currency so that the foreign goods to import will become relatively cheaper and the domestic goods in the foreign countries will be expensive for them. therefore the given statement is false because foreign goods become less expensive related to domestic goods of the exchange rate appreciates
Therefore (B) False is the answer to this question
Exchange Rate = Cost in Russia/Cost in U.S
= 200,000 /50,000
= 4 Ruble/$ is the answer to this question
Add Answer to:
Question 5
When the real exchange rate appreciates, domestic goods become
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Question text Consumer tastes at home and abroad, international trade policy, and prices of domestic and...
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