If the Real Exchange Rate Is Greater Than 1, Then

question 15

Multiple Choice

If the real exchange rate is greater than 1, then the

• A)nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would buy more then enough foreign currency to buy the same good overseas.
• B)nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would not buy enough foregoing currency to buy the same good overseas.
• C)nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would buy more then enough foreign currency to buy the same good overseas.
• D)nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would not buy enough foreign currency to buy the same good overseas.

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Definitions:

Fluctuations

Variations or changes in level, degree, or value that occur over a period of time.

Global Marketplace

Refers to the international, interconnected market where businesses from various countries can exchange goods and services.

Direct Investment

A financial commitment made by an entity located in one country to gain controlling interest in a company situated in a different country.

Exporting

The commercial activity of selling products or services made in one nation to purchasers in a different country.