If the Real Exchange Rate Between the U

question 17

Multiple Choice

If the real exchange rate between the U.S.and Japan is 1,the nominal exchange rate is 100 yen per U.S.dollar and the price of chicken in the U.S.is $2.50 per pound,what is the price of chicken in Japan?

• A)400 yen per pound
• B)250 yen per pound
• C)100 yen per pound
• D)40 yen per pound

---

Definitions:

Hedge

A financial strategy implemented to reduce the risk of adverse price movements in an asset, typically through derivative contracts.

Premium

The amount paid for a product or service beyond its basic cost, often relating to insurance policies, bonds, or options contracts.

Monetary Assets

Assets that hold a fixed monetary value, including cash, currency, and receivables, and are not significantly affected by inflation or currency fluctuations.

Determinable Amount

A financial term referring to an amount that can be objectively measured or accurately estimated.