Suppose the Price of a UK Good Is £300 and the Price

question 43

Multiple Choice

Suppose the price of a UK good is £300 and the price of a eurozone good is €400. Given that the value of the euro/pound real exchange rate is 3, what is the value of the euro/pound nominal exchange rate?

• A) 3
• B) 1.5
• C) 8
• D) 4

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Definitions:

Investment

The allocation of resources, usually money, into assets or projects expected to yield future returns or growth.

Government Spending

Expenditures by government agencies on goods and services that directly affect the economy, including salaries, infrastructure, and welfare programs.

Budget Balance

The financial position of a government, indicating whether it is spending more than its income (deficit), equal to its income (balanced), or less than its income (surplus).

Interest Rate

The obligation, denoted as a percentage of the principal, incurred by borrowers for asset access from lenders.