Suppose That in 2015 the Nominal Exchange Rate Was 9

question 493

Multiple Choice

Suppose that in 2015 the nominal exchange rate was 9 Egyptian pounds per dollar, the price of a basket of goods in the U.S. was $600 and the price of the same basket of goods in Egypt was 6000 pounds. Suppose that in 2016 these values were 10 Egyptian pounds per dollar, $620, and 7200 pounds. From 2015 to 2016 U.S. real exchange rate

• A)appreciated which by itself would make U.S. net exports fall.
• B)appreciated which by itself would make U.S. net exports rise.
• C)depreciated which by itself would make U.S. net exports fall.
• D)depreciated which by itself would make U.S. net exports rise.

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Definitions:

Coefficient

In algebraic expressions, it's the numerical or fixed quantity that comes before and multiplies the variable.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting its sensitivity to price changes.

Price Increase

A rise in the cost of goods or services over time, which can affect purchasing power and economic dynamics.