When the Nominal Exchange Rate Rises

question 72

Multiple Choice

When the nominal exchange rate rises

• A)the domestic currency buys more units of foreign currency,and the domestic currency has depreciated.
• B)the domestic currency buys fewer units of foreign currency,and the domestic currency has depreciated.
• C)the domestic currency buys more units of foreign currency,and the domestic currency has appreciated.
• D)the domestic currency buys fewer units of foreign currency,and the domestic currency has appreciated.

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Definitions:

Magical Thinking

The belief that one's thoughts, words, or actions can influence the outcome of events in the physical world in a manner not governed by the laws of physics or logic.

Theory Perseverance

The persistence of one's initial beliefs, even in the face of contradicting evidence or after the evidence for their foundation has been discredited.

Availability Heuristic

The availability heuristic is a mental shortcut that relies on immediate examples that come to mind when evaluating a specific topic, concept, method, or decision, often leading to bias.

False Consensus Effect

The tendency to overestimate the number of other people who share one’s opinions, attitudes, values, and beliefs.