Assuming No Change in the Nominal Exchange Rate,how Will a Lower

question 236

Multiple Choice

Assuming no change in the nominal exchange rate,how will a lower rate of inflation in the United States relative to Canada affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)

• A)The real exchange rate will rise.
• B)The real exchange rate will fall.
• C)The real exchange rate will be unaffected.
• D)The impact on the real exchange rate cannot be predicted.

Understand economic policy concerns discussed by the Organisation for Economic Co-operation and Development (OECD).

Understand the basic concepts and significance of international business.

Identify different strategies and structures of multinational corporations (MNCs).

Recognize the ethical, legal, and environmental concerns in international business.