Consider an Identical Basket of Goods in Both the U

question 406

Multiple Choice

Consider an identical basket of goods in both the U.S. and India. For a given nominal exchange rate, in which case is it certain that the U.S. real exchange rate with India falls?

• A)the price of the basket of goods rises in the U.S. and India.
• B)the price of the basket of goods rises in the U.S. and falls in India.
• C)the price of the basket of goods falls in the U.S. and rises in India.
• D)the price of the basket of goods falls in both India and the U.S..

---

Definitions:

Industrialization

The process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods.

Immigrants

Individuals who move from one country to another with the intention of settling in the new country, often in search of better living conditions or employment opportunities.

Allophones

Individuals whose first language is neither English nor French, referring to the linguistic diversity in countries like Canada.

Postsecondary Education

Education that occurs after high school, including programs at colleges, universities, and vocational schools.