Use the Information Provided Below to Answer the Following Question(s)

question 16

Multiple Choice

Use the information provided below to answer the following question(s) .
The exchange rate between the British pound and the U.S. dollar is 2. In England, the price level is 1.0 and the one-year interest rate is 20%. In the United States, the price level is .8 and the one-year interest rate is 8%. The inflation rate in both countries is zero.
-Refer to the information above.The real exchange rate (from the United States' perspective) is

• A)0.625.
• B)0.8.
• C)1.6.
• D)2.0.
• E) none of the above

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Definitions:

Numerical Value

A measurable quantity represented by a number, often used to quantify an attribute or parameter in scientific and mathematical contexts.

Outlier

An unusually small or unusually large data value.

Regression Analysis

A set of statistical processes for estimating the relationships among variables.

Residual

The difference between an observed value and the value predicted by a model.