Suppose That the Real Exchange Rate Between the United States

question 8

Multiple Choice

Suppose that the real exchange rate between the United States and South Korea 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 South Korean goods a basket of U.S goods buys) ?

• A)a decrease in the quantity of South Korean currency that can be purchased with a dollar
• B)a decrease in the price of U.S.baskets of goods
• C)a decrease in the price in South Korean currency of South Korean goods.
• D)None of the above is correct.

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Definitions:

Cost Flow

The manner in which costs move through a company's inventory accounts to eventually become cost of goods sold.

FIFO

An inventory valuation method which assumes that the first goods purchased or produced are also the first ones sold, also known as "First In, First Out."

Ending Inventory

The worth of products ready for purchase at the close of a financial period.

Cost Flow Assumption

The method used by businesses to value inventory and calculate the cost of goods sold, based on the order in which products are bought or produced.