Under a Fixed Exchange Rate System, If the Inflation Rate

question 67

Multiple Choice

Under a fixed exchange rate system, if the inflation rate in the United States is 5 percent a year and the inflation rate in Australia is 0 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) possibly increase or decrease.

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Definitions:

Sociable

The characteristic of being inclined to seek out and enjoy the company of others, often characterized by friendliness and the ability to interact well in social situations.

Behavioral Genetics

The field of study that examines the role of genetic and environmental influences on behaviors.

Heredity

The genetic transmission of characteristics from parents to offspring, influencing traits such as appearance, behavior, and disease susceptibility.

Nutritious

Providing essential nutrients that contribute to good health and well-being.