Question 1

Other things the same,if the exchange rate changes from 75 Algerian dinar per dollar to 72 Algerian dinar per dollar,the dollar has

Accepted Answer

A) appreciated and so buys more Algerian goods. 
B) appreciated and so buys fewer Algerian goods. 
C) depreciated and so buys more Algerian goods. 
D) depreciated and so buys fewer Algerian goods.

Question 2

A depreciation of the U.S.real exchange rate induces U.S.consumers to buy

Accepted Answer

A) fewer domestic goods and fewer foreign goods. 
B) more domestic goods and fewer foreign goods. 
C) fewer domestic goods and more foreign goods. 
D) more domestic goods and more foreign goods.

Question 3

A good in the U.S.costs $20.The same good costs 150 pesos in Mexico.If the nominal exchange rate is 10 pesos per dollar,what is the real exchange rate?

Accepted Answer

A) 4/3 so the good is more expensive in the U.S. 
B) 4/3 so the good is more expensive in Mexico 
C) 3/4 so the good is more expensive in the U.S. 
D) 3/4 so the good is more expensive in Mexico

Question 4

Suppose that the real exchange rate between the United States and Brazil is defined in terms of baskets of goods.Other things the same,which of the following will increase the real exchange rate (that is increase the number of baskets of Brazilian goods a basket of U.S.goods buys)?

Accepted Answer

A) an increase in the quantity of Brazilian currency that can be purchased with a dollar 
B) a decrease in the price of U.S.goods 
C) an increase in the price in Brazilian currency of Brazilian goods 
D) All of the above are correct.

Question 5

Other things the same,the real exchange rate between U.S.and Belgian goods would be higher if

Accepted Answer

A) ​prices in the U.S.were higher,or the number of euro the dollar purchased were higher. 
B) ​prices in the U.S.were higher,or the number of euro the dollar purchased were lower. 
C) ​prices in the U.S.were lower,or the number of euro the dollar purchased were higher. 
D) ​prices in the U.S.were lower,or the number of euro the dollar purchased were lower.

Question 6

In Ireland,a pint of beer costs 3 euros.In Australia,a pint of beer costs 4 Australian dollars.If the exchange rate is .8 euros per Australian dollar,what is the real exchange rate?

Accepted Answer

A) 4/2.4 pints of Irish beer per pint of Australian beer 
B) 3/3.2 pint of Irish beer per pint of Australian beer 
C) 3.2/3 pints of Irish beer per pint of Australian beer 
D) 2.4/4 pints of Irish beer per pint of Australian beer

Question 7

A particular brand of toothpaste costs 4 British pounds in London.The nominal exchange rate is .80 and the real exchange rate is about 1.16.These numbers imply that the U.S.price of the same toothpaste is about

Accepted Answer

A) $5.79 
B) $4.29 
C) $3.70 
D) $2.76

Question 8

If the U.S.real exchange rate appreciates,U.S.exports to Europe

Accepted Answer

A) and European exports to the U.S.both rise. 
B) and European exports to the U.S.both fall. 
C) rise,and European exports to the U.S.fall. 
D) fall,and European exports to the U.S.rise.

Question 9

If a dollar currently purchases 12.5 pesos and someone forecasts that in a year it will purchase 14 pesos,then the forecast is given in

Accepted Answer

A) real terms and implies the dollar will appreciate. 
B) real terms and implies the dollar will depreciate. 
C) nominal terms and implies the dollar will appreciate. 
D) nominal terms and implies the dollar will depreciate.

Question 10

Other things the same,which of the following could be a consequence of an appreciation of the U.S.real exchange rate?

Accepted Answer

A) John,a French citizen,decides that Iowa pork is now relatively less expensive and orders more for his restaurant. 
B) Nick,a U.S.citizen,decides that the trip to Nepal he's been thinking about is now affordable. 
C) Roberta,a U.S.citizen,decides to import fewer windshield wipers for her auto parts company. 
D) All of the above are correct.

Question 11

When the Mexican peso gets "stronger" relative to the dollar,

Accepted Answer

A) the U.S.trade deficit with Mexico rises. 
B) the U.S.trade deficit with Mexico falls. 
C) the U.S.trade deficit with Mexico is unchanged. 
D) None of the above necessarily happens.

Question 12

If the exchange rate is 2 Brazilian reals per dollar and a meal in Rio costs 20 reals,then how many dollars does it take to buy a meal in Rio?

Accepted Answer

A) 40 and your purchase will increase Brazil's net exports. 
B) 10 and your purchase will increase Brazil's net exports. 
C) 40 and your purchase will decrease Brazil's net exports. 
D) 10 and your purchase will decrease Brazil's net exports.

Question 13

Other things the same,an increase in the foreign price level

Accepted Answer

A) reduces the real exchange rate.This reduction could be offset by a decrease in the domestic price level. 
B) reduces the real exchange rate.This reduction could be offset by an increase in the domestic price level. 
C) increases the real exchange rate.This increase could be offset by a decrease in the domestic price level. 
D) increases the real exchange rate.This increase could be offset by an increase in the domestic price level.

Question 14

In the United States,a cup of hot chocolate costs $5.In a foreign country,the same hot chocolate costs 6.5 units of that country's currency.If the exchange rate were 1.3 units of foreign currency per U.S.dollar,what is the real exchange rate?

Accepted Answer

A) 1/2 cup of that country's hot chocolate per cup of U.S.hot chocolate 
B) 1 cup of that country's hot chocolate per cup of U.S.hot chocolate 
C) 2 cups of that country's hot chocolate per cup of U.S.hot chocolate 
D) None of the above is correct.

Question 15

You are the CEO of a U.S.firm considering building a factory in Chile.If the dollar appreciates relative to the Chilean peso,then other things the same

Accepted Answer

A) it takes fewer dollars to build the factory.By itself building the factory increases U.S.net capital outflow. 
B) it takes fewer dollars to build the factory.By itself building the factory decreases U.S.net capital outflow. 
C) it takes more dollars to build the factory.By itself building the factory increases U.S.net capital outflow. 
D) it takes more dollars to build the factory.By itself building the factory decreases U.S.net capital outflow.

Question 16

You are planning a graduation trip to Mexico.Other things the same,if the dollar appreciates relative to the peso,then

Accepted Answer

A) the dollar buys fewer pesos.Your hotel room in Mexico will require fewer dollars. 
B) the dollar buys fewer pesos.Your hotel room in Mexico will require more dollars. 
C) the dollar buys more pesos.Your hotel room in Mexico will require fewer dollars. 
D) the dollar buys more pesos.Your hotel room in Mexico will require more dollars.

Question 17

If the exchange rate is .60 British pounds = $1,a bottle of ale that costs 3 pounds costs

Accepted Answer

A) $1.80. 
B) $4.80. 
C) $5. 
D) None of the above is correct.

Question 18

An appreciation of the U.S.real exchange rate induces U.S.consumers to buy

Accepted Answer

A) fewer domestic goods and fewer foreign goods. 
B) more domestic goods and fewer foreign goods. 
C) fewer domestic goods and more foreign goods. 
D) more domestic goods and more foreign goods.

Question 19

If the exchange rate rises from .65 British pounds per dollar to .70 pounds per dollar,then compared to British goods,U.S.goods become

Accepted Answer

A) relatively more expensive for both British and U.S.residents. 
B) relatively more expensive for British residents and relatively less expensive for U.S.residents. 
C) relatively less expensive for British residents and relatively more expensive for U.S.residents. 
D) relatively less expensive for both British and U.S.residents.

Question 20

If the real exchange rate for coal is 1.5,the price of coal in the U.S.is $50 per ton,and the price of coal in Britain is 20 British pounds per ton,what is the nominal exchange rate?

Accepted Answer

A) 15/4 
B) 5/3 
C) 3/5 
D) 4/15

Exam 18: Open Economy Macroeconomics Basic Concepts: The Prices for International Transactions Real and Nominal Exchange Rates

Other things the same,if the exchange rate changes from 75 Algerian dinar per dollar to 72 Algerian dinar per dollar,the dollar has

A depreciation of the U.S.real exchange rate induces U.S.consumers to buy

A good in the U.S.costs $20.The same good costs 150 pesos in Mexico.If the nominal exchange rate is 10 pesos per dollar,what is the real exchange rate?

Suppose that the real exchange rate between the United States and Brazil is defined in terms of baskets of goods.Other things the same,which of the following will increase the real exchange rate (that is increase the number of baskets of Brazilian goods a basket of U.S.goods buys) ?

Other things the same,the real exchange rate between U.S.and Belgian goods would be higher if

In Ireland,a pint of beer costs 3 euros.In Australia,a pint of beer costs 4 Australian dollars.If the exchange rate is .8 euros per Australian dollar,what is the real exchange rate?

A particular brand of toothpaste costs 4 British pounds in London.The nominal exchange rate is .80 and the real exchange rate is about 1.16.These numbers imply that the U.S.price of the same toothpaste is about

If the U.S.real exchange rate appreciates,U.S.exports to Europe

If a dollar currently purchases 12.5 pesos and someone forecasts that in a year it will purchase 14 pesos,then the forecast is given in

Other things the same,which of the following could be a consequence of an appreciation of the U.S.real exchange rate?

When the Mexican peso gets "stronger" relative to the dollar,

If the exchange rate is 2 Brazilian reals per dollar and a meal in Rio costs 20 reals,then how many dollars does it take to buy a meal in Rio?

Other things the same,an increase in the foreign price level

In the United States,a cup of hot chocolate costs $5.In a foreign country,the same hot chocolate costs 6.5 units of that country's currency.If the exchange rate were 1.3 units of foreign currency per U.S.dollar,what is the real exchange rate?

You are the CEO of a U.S.firm considering building a factory in Chile.If the dollar appreciates relative to the Chilean peso,then other things the same

You are planning a graduation trip to Mexico.Other things the same,if the dollar appreciates relative to the peso,then

If the exchange rate is .60 British pounds = $1,a bottle of ale that costs 3 pounds costs

An appreciation of the U.S.real exchange rate induces U.S.consumers to buy

If the exchange rate rises from .65 British pounds per dollar to .70 pounds per dollar,then compared to British goods,U.S.goods become

If the real exchange rate for coal is 1.5,the price of coal in the U.S.is $50 per ton,and the price of coal in Britain is 20 British pounds per ton,what is the nominal exchange rate?