For a Given Nominal Exchange Rate and Domestic Price Level,an

question 114

Multiple Choice

For a given nominal exchange rate and domestic price level,an increase in the foreign price level __________ the real exchange rate.

• A) increases
• B) decreases
• C) may either increase or decrease
• D) does not change
• E) offsets any change in

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Definitions:

Diminishing Slope

usually refers to the principle of diminishing returns in economics, where the rate of return or yield decreases as more input is added.

Per-Worker Production Function

A graph that shows the relationship between the amount of input per worker and the output per worker.

Capital Deepening

The increase in the amount of capital per worker, leading to higher productivity and possibly higher wages.

U.S. GDP Per Capita

A measure that divides the Gross Domestic Product of the United States by its total population, indicating the average economic output per person.