Suppose That the Real Exchange Rate Between the United States

question 238

Multiple Choice

Suppose that the real exchange rate between the United States and Kenya is defined in terms of baskets of goods. Other things the same, which of the following will increase the real exchange rate (that is increase the number of baskets of Kenyan goods a basket of U.S. goods buys) ?

• A)an increase in the number of Kenyan shillings that can be purchased with a dollar
• B)an increase in the price of U.S. baskets of goods
• C)a decrease in the price in Kenyan shillings of Kenyan goods
• D)All of the above are correct.

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Definitions:

Direct Materials

Direct materials refer to raw materials that can be directly attributed to the production of a specific product, considered a variable cost in manufacturing.

Cost of Goods Manufactured

The total cost incurred to manufacture products, including costs related to materials, labor, and manufacturing overhead, within a specific period.

Ending Balance

The amount of money in an account at the end of a given period, after all transactions have been accounted for.

Raw Materials

Essential substances and components utilized in production processes for the creation of completed items.