If the Exchange Rate Is Defined as the Price of the Foreign

question 70

Multiple Choice

If the exchange rate is defined as the price of the foreign currency in terms of the domestic currency, an increase in the exchange rate:

• A)increases domestic demand for foreign goods.
• B)makes domestic goods cheaper in the foreign markets.
• C)lowers net exports.
• D)lowers aggregate expenditure on domestic goods.
• E)increases the domestic country's external debt burden.

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