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:

Direction

Guidance or instructions on how to proceed; or, the course along which something moves.

Correlation Coefficient

A statistical measure that indicates the extent to which two variables fluctuate together, showing the strength and direction of their relationship.

Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two variables.

Inverse Correlation

A relationship between two variables in which they move in opposite directions; as one variable increases, the other decreases.