Assuming No Change in the Nominal Exchange Rate,how Will a Decrease

question 185

Multiple Choice

Assuming no change in the nominal exchange rate,how will a decrease in the price level in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)

• A)The real exchange rate will rise.
• B)The real exchange rate will fall.
• C)The real exchange rate will be unaffected.
• D)The impact on the real exchange rate cannot be predicted.

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Definitions:

Factory Worker

An individual employed in a manufacturing facility or plant, responsible for operating machinery, assembling products, or processing goods.

Family Wage

Idea that male workers should earn a wage sufficient to enable them to support their entire family without their wives’ having to work outside the home.

Male Head

The concept often associated with traditional family structures, referring to a male family member, usually the father or husband, serving as the primary authority figure and provider.

Domestic Servants

Individuals employed within a home to perform household chores and duties.