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

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Definitions:

Peripheral

Relating to or situated on the edge or periphery of something.

Somatic Nervous System

The part of the peripheral nervous system that handles voluntary control of body movements via skeletal muscles.

Autonomic Nervous System

A division of the peripheral nervous system that controls involuntary functions, such as heartbeat and digestion.

Skeletal

Pertaining to the skeleton, the internal framework of bones and cartilages that supports and protects the body's organs.