Suppose That the Real Exchange Rate Between the United States

question 18

Multiple Choice

Suppose that the real exchange rate between the United States and Kenya is defined in terms of baskets of goods.Other things the same,which of the following will increase the real exchange rate (that is increase the number of baskets of Kenyan goods a basket of U.S.goods buys) ?

• A)an increase in the number of Kenyan shillings that can be purchased with a dollar
• B)an increase in the price of U.S.goods
• C)a decrease in the price in Kenyan shillings of Kenyan goods
• D)All of the above are correct.

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Definitions:

Asthenosphere

The highly viscous, mechanically weak, and ductilely-deforming region of the upper mantle of the Earth, which lies just below the lithosphere.

Plate Boundary

The region where two tectonic plates meet, which can be characterized by seismic activity, mountain building, and volcanic eruptions.

Divergent Plate Boundary

A boundary where tectonic plates are moving away from each other, often resulting in the creation of new crust as magma rises and solidifies.

Oceanic Crust

The part of Earth's lithosphere that underlies the ocean basins, composed primarily of basalt and gabbro.