Under a Fixed Exchange Rate System, If the Inflation Rate

question 54

Multiple Choice

Under a fixed exchange rate system, if the inflation rate in the United States is 0 percent a year and the inflation rate in Australia is 5 percent a year, then the U.S. real exchange rate will

• A) remain constant.
• B) increase 5 percent a year.
• C) decrease 5 percent a year.
• D) may increase or decrease.

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Futures Contract

A formal, uniform agreement for purchasing or selling an item at a set price at a future date, commonly utilized for trading commodities or financial instruments.

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A term for timber after it has been processed into beams and planks, a stage in the process of wood production.

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