Homework Answers
The nominal exchange rate can be defined as the number of units of domestic currency that can purchase a unit of given foreign currency.
The Nominal Exchange rate is the ratio of the value of the currency of two countries.
Real exchange rate= nominal exchange rate * foreign price/domestic price
As it has been given that the nominal exchange rate increase by 2%. If prices (both domestic and foreign do not change), it can be said that domestic goods are relatively cheaper and that foreign goods are relatively more expensive.
This is because with the increase in the nominal exchange rate by 2%, the domestic currency depreciates and foreign currency appreciates.
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4. Assume that the nominal exchange rate increases by 2%. If prices (both domestic and foreign...
A reduction in 12. the real exchange rate indicates that Group of answer choices foreign goods...
A reduction in 12. the real
exchange rate indicates that Group of answer choices foreign goods
are now relatively cheaper. foreign goods are now relatively more
expensive. domestic goods are now relatively more expensive. both A
and C
Question 12 A reduction in the real exchange rate indicates that O foreign goods are now relatively cheaper. O foreign goods are now relatively more expensive. o domestic goods are now relatively more expensive. both A and C
Define the nominal exchange rate as the foreign price of domestic currency, e.g. the amount of...
Define the nominal exchange rate as the foreign price of domestic currency, e.g. the amount of Yen per dollar. When the interest parity condition holds, we know that the domestic interest rate must be equal to: Group of answer choices the foreign interest rate minus the expected rate of appreciation of the domestic currency. the expected rate of appreciation of the domestic currency. the foreign interest rate. the expected rate of depreciation of the domestic currency. the foreign interest rate...
The nominal exchange rate (E) as defined in the text represents the price of domestic currency...
The nominal exchange rate (E) as defined in the text represents the price of domestic currency in terms of foreign currency. none of the above the number of units of foreign currency you can obtain with one unit of domestic currency. the number of units of domestic goods you can obtain with one unit of foreign goods. both A and C For this question, suppose the domestic interest rate is 4% and that the foreign interest rate is 7%. And...
Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign...
Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. What is the nominal exchange rate? (3%) a. Suppose the real exchange rate rises by 10%, the inflation rate in the domestic b. country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change? (3%) Suppose the nominal exchange rate rises by 5%, the real exchange rate rises by...
answer these 4 . will rate after If the prices in the United States decrease compared...
answer these 4 . will rate after
If the prices in the United States decrease compared to other countries, we would expect o the demand for dollars to increase because U.S. goods are cheaper. the demand for dollars to decrease because U.S. goods are more expensive. the supply of foreign currency in the foreign exchange rate markets to decrease. the demand for foreign currency in the foreign exchange rate markets to increase. We were unable to transcribe this imageThe supply...
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)?
2. The percentage change in the nominal exchange rate equals the percentage change in the real...
2. The percentage change in the nominal exchange rate equals the percentage change in the real exchange rate plus the: A) foreign inflation rate minus the domestic inflation rate. B) domestic inflation rate minus the foreign inflation rate. C) foreign exchange rate minus the domestic exchange rate. D) domestic interest rate minus the foreign interest rate.
QUESTION 4 Suppose that domestic price level is constant and foreign price level increases and the...
QUESTION 4 Suppose that domestic price level is constant and foreign price level increases and the nominal exchange rate depreciates. How will the real exchange rate be affected? real exchange rate appreciates real exchange rate depreciates real exchange rate is not affected none of the above
Let S = 0.90, the current exchange rate $ / €, P = 3 € the...
Let S = 0.90, the current exchange rate $ / €, P = 3 € the price level of goods in the domestic economy denominated in the currency of the country, P * = 2 $ the price level of the foreign economy in the currency of that country . (i) Find the real exchange rate in terms of foreign product units per domestic product unit. ii) If the domestic price level rises by 3% while the foreign one does...
What happens to the real exchange rate and net exports in each of the following cases?...
What happens to the real exchange rate and net exports in each of the following cases? a. The world interest rate rises (r*) b. expansionary fiscal policy at home i.e. domestic output rises c. Foreign demand for domestic goods falls as result of contraction fiscal policy at abroad d. Import restrictions i.e. quota or tariffs on foreign goods e. The domestic prices rise more than foreign prices f. nominal exchange rate e falls
A reduction in 12. the real
exchange rate indicates that Group of answer choices foreign goods
are now relatively cheaper. foreign goods are now relatively more
expensive. domestic goods are now relatively more expensive. both A
and C
Question 12 A reduction in the real exchange rate indicates that O foreign goods are now relatively cheaper. O foreign goods are now relatively more expensive. o domestic goods are now relatively more expensive. both A and C
The nominal exchange rate (E) as defined in the text represents the price of domestic currency in terms of foreign currency. none of the above the number of units of foreign currency you can obtain with one unit of domestic currency. the number of units of domestic goods you can obtain with one unit of foreign goods. both A and C For this question, suppose the domestic interest rate is 4% and that the foreign interest rate is 7%. And...
Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. What is the nominal exchange rate? (3%) a. Suppose the real exchange rate rises by 10%, the inflation rate in the domestic b. country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change? (3%) Suppose the nominal exchange rate rises by 5%, the real exchange rate rises by...
answer these 4 . will rate after
If the prices in the United States decrease compared to other countries, we would expect o the demand for dollars to increase because U.S. goods are cheaper. the demand for dollars to decrease because U.S. goods are more expensive. the supply of foreign currency in the foreign exchange rate markets to decrease. the demand for foreign currency in the foreign exchange rate markets to increase. We were unable to transcribe this imageThe supply...
2. The percentage change in the nominal exchange rate equals the percentage change in the real exchange rate plus the: A) foreign inflation rate minus the domestic inflation rate. B) domestic inflation rate minus the foreign inflation rate. C) foreign exchange rate minus the domestic exchange rate. D) domestic interest rate minus the foreign interest rate.
QUESTION 4 Suppose that domestic price level is constant and foreign price level increases and the nominal exchange rate depreciates. How will the real exchange rate be affected? real exchange rate appreciates real exchange rate depreciates real exchange rate is not affected none of the above
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