Use the Following Information to Answer the Question(s) Below

question 32

Multiple Choice

Use the following information to answer the question(s) below:
The exchange rate between the Australian dollar and the British pound is 0.65 (i.e., 0.65 pounds per Australian dollar) . In the U.K., the price level is 1.0 and the interest rate is 15%. In Australia, the price level is 0.5 and the interest rate is 10%. The inflation rate in both countries is zero.
-Refer to the information above. The price of Australian goods measured in pounds is:

• A) 0.325 U.K. goods.
• B) 0.125 U.K. goods.
• C) 0.425 U.K. goods.
• D) 0.525 U.K. goods.
• E) 0.225 U.K. goods.

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Definitions:

Employed Workers

Individuals in the workforce who have secured employment and are currently working.

Unemployment Rate

The unemployment rate measures the percentage of the labor force that is jobless and actively seeking employment.

Cyclical Unemployment

A form of unemployment that occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work.

Unemployment Insurance

A government program that provides financial assistance to unemployed workers who meet certain eligibility requirements.