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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Definitions:

Efficient Level

Describes a state where resources are allocated in a way that maximizes productivity or utility with minimal waste.

External Costs

Uncompensated negative effects experienced by others due to an individual or company's actions, not reflected in market prices.

Marginal Damage

The additional harm or cost caused by producing one more unit of a good or service, often used in the context of environmental economics.

Total Damage

Total Damage refers to the cumulative harm or financial loss incurred as a result of an action or event.