If the Real Exchange Rate Is Less Than 1, Then

question 222

Multiple Choice

If the real exchange rate is less than 1, then the

• A)nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would buy more then enough foreign currency to buy the same good overseas.
• B)nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would not buy enough foregoing currency to buy the same good overseas.
• C)nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would buy more then enough foreign currency to buy the same good overseas.
• D)nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would not buy enough foreign currency to buy the same good overseas.

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Definitions:

Primacy and Recency Effects

Psychological terms describing the tendency to remember information that appears at the beginning (primacy) and end (recency) of a list better than information in the middle.

Memory

The cognitive process of encoding, storing, and retrieving information.

Retrieval

The process of accessing and bringing into conscious awareness information stored in memory.

Stored Information

Information that is retained in the brain or another storage system for retrieval and use at a later time.