Concerning the Exchange Rate Index of the U

question 76

Multiple Choice

Concerning the exchange rate index of the U.S.dollar, suppose that the dollar's real exchange rate index rises from 95 to 115.This means that

• A) the dollar has depreciated against the currencies of its major trading partners.
• B) the dollar has appreciated against the currencies of its major trading partners.
• C) the dollar's nominal exchange rate index falls.
• D) the dollar's nominal exchange rate index remains constant.

---

Definitions:

National Saving

The total amount saved by a country's economy, calculated as the sum of private and public savings, often representing the difference between national income and consumption.

Closed Economy

An economic system that does not interact with other economies in terms of trade, investment, or migration.

Closed Economy

An economic system that does not engage in international trade with outside countries and relies wholly on its own resources.

Loanable Funds

The funds available for borrowing in the financial markets, consisting of savings and sometimes bank loans that are available to be lent to businesses and individuals.