Assuming No Change in the Nominal Exchange Rate,how Will a Decrease

question 185

Multiple Choice

Assuming no change in the nominal exchange rate,how will a decrease in the price level in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)

• A)The real exchange rate will rise.
• B)The real exchange rate will fall.
• C)The real exchange rate will be unaffected.
• D)The impact on the real exchange rate cannot be predicted.

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Definitions:

Growth Hormone

A hormone that stimulates growth, cell reproduction, and cell regeneration in humans and other animals.

Melatonin

Pineal gland hormone that regulates sleep–wake cycles and seasonal changes; secreted only in the dark.

Gonadotropin-Releasing Hormone

A hormone responsible for the release of follicle-stimulating hormone and luteinizing hormone from the anterior pituitary.

Anterior Pituitary

The front part of the pituitary gland responsible for releasing several key hormones, including growth hormone and ACTH.