If the Real Exchange Rate Is Greater Than 1, Then

question 371

Multiple Choice

If the real exchange rate is greater 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.

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Definitions:

Type II Error

The error that occurs when a false null hypothesis is not rejected, indicating a missed detection of an effect.

Commuted

Traveling regularly over a long distance between one's home and place of work or study.

Survey

a method of gathering information by asking a series of questions to a group of people.

Type I Error

The mistaken dismissal of a correct null hypothesis, often referred to as a "false positive."