If the Real Exchange Rate Is Equal to 1

question 3

Multiple Choice

If the real exchange rate is equal to 1,

• A)currencies are at purchasing power parity
• B)the relative demand for domestically produced goods will rise
• C)the relative demand for domestically produced goods will fall
• D)foreign investors will try to buy more domestic assets
• E)net exports is equal to zero

---

Definitions:

20-Year Period

A term generally used to describe a fixed duration of twenty years, which can be relevant in various contexts, such as financial investments, statutes of limitations, and property rights.

General Welfare Clause

Article I, Section 8, Clause 1 of the U.S. Constitution which reads in part that Congress is empowered to “lay and collect taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common defense and general welfare of the United States.”

U.S. Constitution

The supreme law of the United States, establishing the national government and fundamental laws, and guaranteeing certain basic rights to its citizens.