Suppose That the Real Exchange Rate Between the United States

question 261

Multiple Choice

Suppose that the real exchange rate between the United States and Vietnam is defined in terms of baskets of goods. Other things the same, which of the following will increase the real exchange rate (that is increase the number of baskets of Vietnamese goods a basket of U.S. goods buys) ?

• A)an increase in the quantity of Vietnamese currency that can be purchased with a dollar
• B)an increase in the price of U.S. baskets of goods
• C)a decrease in the price in Vietnamese currency of Vietnamese goods
• D)All of the above are correct.

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