If the Real Exchange Rate Is Less Than 1, Then

question 199

Multiple Choice

If the real exchange rate is less than 1, then the

• A) nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would buy more than enough foreign currency to buy the same good overseas.
• B) nominal exchange rate x U.S. price > foreign price. The dollars required to purchase a good in the U.S. would not buy enough foregoing currency to buy the same good overseas.
• C) nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would buy more than enough foreign currency to buy the same good overseas.
• D) nominal exchange rate x U.S. price < foreign price. The dollars required to purchase a good in the U.S. would not buy enough foreign currency to buy the same good overseas.

Comprehend the difference between elastic and inelastic demand.

Identify factors influencing elasticity of demand, including the availability of substitutes.

Understand the concept and significance of income elasticity of demand.

Grasp the concept of cross elasticity of demand and how it relates to substitutes and complements.

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Definitions:

Poverty

A state where individuals or communities lack the financial resources and essentials for a minimum standard of living, often measured by income level.

Land Reform

Policy changes aimed at creating a more efficient distribution of land ownership in developing countries. Can involve everything from government purchasing large land estates and dividing the land into smaller farms to consolidating tiny plots of land into larger, more efficient private farms.

Institutional Obstacle

Barriers established by social, legal, or political institutions that hinder economic development or the operation of markets.

Extreme Poverty

A condition characterized by severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education, and information. It depends not only on income but also access to services.