For a Given Nominal Exchange Rate and Foreign Price Level

question 139

Multiple Choice

For a given nominal exchange rate and foreign price level, a decrease in the domestic price level ________ the real exchange rate.

• A)increases
• B)decreases
• C)may either increase or decrease
• D)offsets any change in

---

Definitions:

Physical Units Method

An inventory costing method that allocates expenses based on the physical units produced or available, commonly used for homogeneous products.

Actual Physical Units

Actual physical units refer to the tangible quantity of items produced, held in inventory, or sold, as measured by physical count.

Joint Costs

Costs that are incurred in the process of producing two or more products simultaneously and cannot be easily separated for each product.

Market Value at Split-Off Method

A method used in accounting to allocate joint costs among products on the basis of their respective market values at the point where they are separable or split-off.