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

question 236

Multiple Choice

Assuming no change in the nominal exchange rate,how will a lower rate of inflation in the United States relative to Canada 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:

Individual Parts

Components or pieces that when combined form a whole system or object.

Physiological Psychology

A branch of psychology that studies the relationship between behavior and the physical processes of the brain and other parts of the nervous system.

University of Leipzig

The University of Leipzig is a renowned research university located in Leipzig, Germany, established in 1409, making it one of the world's oldest universities.

Wilhelm Wundt

A German psychologist widely considered the father of experimental psychology, who established the first psychological laboratory.