The Answer to the Question of Whether or Not a U.S

question 15

Multiple Choice

The answer to the question of whether or not a U.S. dollar will buy more in the U.S. or in a foreign country is determined by:

• A) the nominal exchange rate.
• B) the real exchange rate.
• C) whether the nominal exchange rate is > or < than 1.
• D) you cannot determine the answer until you travel to the foreign country and convert U.S. dollars to the foreign currency.

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Definitions:

External Benefit

A benefit that people other than the consumer or producer enjoy, resulting from a transaction or activity.

Economic Efficiency

A condition in which all available resources are utilized in the most effective manner to satisfy society's needs and wants, minimizing waste and maximizing value.

Market Price

The current market value at which an asset or service is up for sale or purchase.

External Benefits

Positive effects experienced by those not directly involved in an economic transaction.