If the Exchange Rate Between British Pounds Sterling and the Canadian

question 111

Multiple Choice

If the exchange rate between British pounds sterling and the Canadian dollar is 1 pound = $2.80,then

• A)one pound exchanges for 0.28 dollars.
• B)one pound exchanges for 2.40 dollars.
• C)one dollar exchanges for 0.280 pounds.
• D)one dollar exchanges for 0.357 pounds.
• E)one dollar exchanges for 1.40 pounds.

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Definitions:

Aggregate Demand

The total demand for all goods and services within an economy at a given overall price level and time.

Hyperinflation

Extremely high and typically accelerating inflation, drastically eroding the real value of the local currency.

Real Interest Rate

is the interest rate adjusted for the effects of inflation, representing the true cost of borrowing and the real yield to investors.

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage rate.