If the Real Exchange Rate Is 1

question 30

Multiple Choice

If the real exchange rate is 1.0, the price level of U.S.goods is 120, and the dollar price of foreign exchange is 0.8, what is the price level of foreign goods?

• A)75
• B)80
• C)100
• D)120
• E)150

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Definitions:

Reciprocity

Reciprocity is a mutual exchange of privileges or interactions between two parties where each offers something in return.

Misrepresentation

The act of giving a false or misleading account of the nature of something, often to deceive or mislead.

Hire-Purchase Agreement

A contract where an item is leased for a period of time and the lessee has the option to purchase the item at the end of the agreement.

False Information

Incorrect or misleading data presented as facts.