Quiz 522

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Quiz 522

1. The nominal exchange rate is the

a. nominal interest rate in one country divided by the nominal interest rate in the other country.
b. the ratio of a foreign country’s interest rate to the domestic interest rate.
c. rate at which a person can trade the currency of one country for another.
d. the real exchange rate minus the inflation rate.

2. If the exchange rate is .60 British pounds = $1, a bottle of ale that costs 3 pounds costs
a. $1.80.
b. $4.80.
c. $5.
d. None of the above is correct.

3. If the exchange rate is 5 Egyptian pounds per U.S. dollar, a watch that costs $25 US dollars
costs
a. 125 Egyptian pounds
b. 50 Egyptian pounds
c. 5 Egyptian pounds
d. None of the above is correct.

4. If the exchange rate is 2 Brazilian reals per dollar and a meal in Rio costs 20 reals, then how
many dollars does it take to buy a meal in Rio?
a. 40 and your purchase will increase Brazil’s net exports.
b. 10 and your purchase will increase Brazil’s net exports.
c. 40 and your purchase will decrease Brazil’s net exports.
d. 10 and your purchase will decrease Brazil’s net exports.

5. The dollar is said to depreciate against the euro if

a. the exchange rate falls. Other things the same, it will cost fewer euros to buy U.S. goods.
b. the exchange rate falls. Other things the same, it will cost more euros to buy U.S. goods.
c. the exchange rate rises. Other things the same, it will cost fewer euros to buy U.S. goods.
d. the exchange rate rises. Other things the same, it will cost more euros to buy U.S. goods.

6. The dollar is said to appreciate against the euro if

a. the exchange rate falls. Other things the same, it will cost fewer euros to buy U.S. goods.
b. the exchange rate falls. Other things the same, it will cost more euros to buy U.S. goods.
c. the exchange rate rises. Other things the same, it will cost fewer euros to buy U.S. goods.
d. the exchange rate rises. Other things the same, it will cost more euros to buy U.S. goods.

7. If you go to the bank and notice that a dollar buys more Japanese yen than it used to, then the
dollar has
a. appreciated. Other things the same, the appreciation would make Americans less likely to
travel to Japan.
b. appreciated. Other things the same, the appreciation would make Americans more likely to
travel to Japan.
c. depreciated. Other things the same, the depreciation would make Americans less likely to
travel to Japan.
d. depreciated. Other things the same, the depreciation would make Americans more likely to
travel to Japan.

8. You are planning a graduation trip to Mexico. Other things the same, if the dollar appreciates
relative to the peso, then
a. the dollar buys fewer pesos. Your hotel room in Mexico will require fewer dollars.
b. the dollar buys fewer pesos. Your hotel room in Mexico will require more dollars.
c. the dollar buys more pesos. Your hotel room in Mexico will require fewer dollars.
d. the dollar buys more pesos. Your hotel room in Mexico will require more dollars.

9. You are the CEO of a U.S. firm considering building a factory in Chile. If the dollar
appreciates relative to the Chilean peso, then other things the same
a. it takes fewer dollars to build the factory. By itself building the factory increases U.S. net
capital outflow.
b. it takes fewer dollars to build the factory. By itself building the factory decreases U.S. net
capital outflow.
c. it takes more dollars to build the factory. By itself building the factory increases U.S. net
capital outflow.
d. it takes more dollars to build the factory. By itself building the factory decreases U.S. net
capital outflow.

10. You are staying in London over the summer and you have a number of dollars with you. If
the dollar appreciates relative to the British pound, then other things the same,
a. the dollar would buy more pounds. The appreciation would discourage you from buying as
many British goods and services.
b. the dollar would buy more pounds. The appreciation would encourage you to buy more British
goods and services.
c. the dollar would buy fewer pounds. The appreciation would discourage you from buying as
many British goods and services.
d. the dollar would buy fewer pounds. The appreciation would encourage you to buy more
British goods and services.

11. You are planning a graduation trip to Mexico. Other things the same, if the dollar depreciates
relative to the peso, then
a. the dollar buys fewer pesos. Your hotel room in Mexico will require fewer dollars.
b. the dollar buys fewer pesos. Your hotel room in Mexico will require more dollars.
c. the dollar buys more pesos. Your hotel room in Mexico will require fewer dollars.
d. the dollar buys more pesos. Your hotel room in Mexico will require more dollars.

12. If you are vacationing in France and the dollar depreciates relative to the euro, then
a. the dollar buys more euros. It will take fewer dollars to buy a good that costs 50 euros.
b. the dollar buys more euros. It will take more dollars to buy a good that costs 50 euros.
c. the dollar buys fewer euros. It will take fewer dollars to buy a good that costs 50 euros.
d. the dollar buys fewer euros. It will take more dollars to buy a good that costs 50 euros.

13. If the exchange rate rises from .65 British pounds per dollar to .70 pounds per dollar, then
compared to British goods, U.S. goods become
a. relatively more expensive for both British and U.S. residents.
b. relatively more expensive for British residents and relatively less expensive for U.S. residents.
c. relatively less expensive for British residents and relatively more expensive for U.S. residents.
d. relatively less expensive for both British and U.S. residents.

14. Other things the same, if the exchange rate changes from 75 Algerian dinar per dollar to 72
Algerian dinar per dollar, the dollar has
a. appreciated and so buys more Algerian goods.
b. appreciated and so buys fewer Algerian goods.
c. depreciated and so buys more Algerian goods.
d. depreciated and so buys fewer Algerian goods.

15. Other things the same, if the exchange rate changes from 30 Thai bhat per dollar to 25 Thai
bhat per dollar, then the dollar has
a. appreciated and so buys more Thai goods.
b. appreciated and so buys fewer Thai goods.
c. depreciated and so buys more Thai goods.
d. depreciated and so buys fewer Thai goods.

16. Other things the same, if the exchange rate changes from .8 euros per dollar to .9 euros per
dollar, the dollar
a. depreciates so U.S. goods become less expensive relative to foreign goods.
b. depreciates so U.S. goods become more expensive relative to foreign goods.
c. appreciates so U.S. goods become less expensive relative to foreign goods.
d. appreciates so U.S. goods become more expensive relative to foreign goods.

17. Other things the same, if the exchange rate changes from 6 Chinese yuan per dollar to 7
Chinese yuan per dollar, then the dollar
a. appreciates and buys more Chinese goods.
b. appreciates and buys fewer Chinese goods.
c. depreciates and buys more Chinese goods.
d. depreciates and buys fewer Chinese goods.

18. If the exchange rate changes from 148 Kazakhstan tenge per dollar to 155 Kazakhstan tenge
per dollar, the dollar has
a. appreciated. Other things the same, it now takes fewer dollars to buy Kazakhstani goods.
b. appreciated. Other things the same, it now takes more dollars to buy Kazakhstani goods.
c. depreciated. Other things the same, it now takes fewer dollars to buy Kazakhstani goods.
d. depreciated. Other things the same, it now takes more dollars to buy Kazakhstani goods.

19. If a dollar currently purchases 12.5 pesos and someone forecasts that in a year it will
purchase 14 pesos, then the forecast is given in
a. real terms and implies the dollar will appreciate.
b. real terms and implies the dollar will depreciate.
c. nominal terms and implies the dollar will appreciate.
d. nominal terms and implies the dollar will depreciate.

20. The real exchange rate is the nominal exchange rate, defined as foreign currency per dollar,
times
a. U.S. prices minus foreign prices.
b. U.S. prices divided by foreign prices.
c. foreign prices divided by U.S. prices.
d. None of the above is correct.

21. If the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the
foreign price is P*, then the real exchange rate is defined as
a. e(P*/P).
b. e(P/P*).
c. e + P*/P.
d. e - P/P*.

22. If the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the
foreign price is P*, then the real exchange rate is defined as
a. P*/(Pe).
b. P/(P*e).
c. e(P*/P).
d. e(P/P*),

23. Other things the same, an increase in the foreign price level
a. reduces the real exchange rate. This reduction could be offset by a decrease in the domestic
price level.
b. reduces the real exchange rate. This reduction could be offset by an increase in the domestic
price level.
c. increases the real exchange rate. This increase could be offset by a decrease in the domestic
price level.
d. increases the real exchange rate. This increase could be offset by an increase in the domestic
price level.

24. Other things the same, the real exchange rate between U.S. and Belgian goods would be
higher if
a. prices in the U.S. were higher, or the number of euro the dollar purchased were higher.
b. prices in the U.S. were higher, or the number of euro the dollar purchased were lower.
c. prices in the U.S. were lower, or the number of euro the dollar purchased were higher.
d. prices in the U.S. were lower, or the number of euro the dollar purchased were lower.

25. Other things the same, the real exchange rate between American and Chinese goods would
be higher if
a. prices of Chinese goods were higher, or the number of yuan a dollar purchased was higher.
b. prices of Chinese goods were higher, or the number of yuan a dollar purchased was lower.
c. prices of Chinese goods were lower, or the number of yuan a dollar purchased was higher.
d. prices of Chinese goods were lower, or the number of yuan a dollar purchased was lower.

26. Other things the same, the real exchange rate between American and French goods would be
lower if
a. prices of French goods were higher, or the number of euros a dollar purchased was higher.
b. prices of French goods were higher, or the number of euros a dollar purchased was lower.
c. prices of French goods were lower, or the number of euros a dollar purchased was higher.
d. prices of French goods were lower, or the number of euros a dollar purchased was lower.

27. If a U.S. dollar purchases 4 Argentinean pesos, and a gallon of milk costs $3 in the U.S. and
6 pesos in Argentina what is the real exchange rate?
a. 2
b. 3/2
c. 2/3
d. 1/2

28. If the exchange rate is 1.25 New Zealand dollars per U.S dollar, the price of apples is $2 a
pound in the U.S. and 1 New Zealand dollar per pound in New Zealand, what is the real
exchange rate?
a. 2.50
b. 2
c. 1.25
d. .75

29. If the exchange rate is .70 euro per dollar, the price of an MP3 player in Paris is 150 euros
and the price of an MP3 player in the U.S. is $150, then what is the real exchange rate?
a. 1/.70 French MP3 players per U.S. MP3 player
b. 1 French MP3 players per U.S. MP3 player
c. .70 French MP3 players per U.S. MP3 player.
d. None of the above are correct.
30. The nominal exchange rate is 2 Barbados dollars per U.S. dollar. If the price of a good in
Barbados is 3 Barbados dollars and the price in the U.S. is 2 U.S. dollars, what is the real
exchange rate to the nearest 100th?
a. 3 Barbados goods per U.S. good
b. 1.33 Barbados goods per U.S. good
c. .75 Barbados goods per U.S. good
d. none of the above is correct

31. Exchange rates are 100 yen per dollar, 0.8 euro per dollar, and 12 pesos per dollar. A bottle
of beer in New York costs 6 dollars, 500 yen in Tokyo, 6 euro in Munich, and 84 pesos in
Cancun. Where is the most expensive and the cheapest beer, in that order?
a. Cancun, New York
b. Munich, Tokyo
c. Tokyo, Munich
d. New York, Cancun

32. The nominal exchange rate is 4 Saudi Arabian riyals, 8 Moroccan dirham, 60 Indian rupees,
or .8 euros per U.S. dollar. A fast food breakfast costs $5 in the U.S., 30 riyals in Saudi Arabia,
40 Moroccan dirham in Morocco, 250 Indian rupees in India, and 5 euros in France. According
to these numbers, where is the real exchange rate between American and foreign goods the
lowest?
a. Saudi Arabia
b. Morocco
c. India
d. Britain

33. The nominal exchange rate is .80 euros per dollar and the real exchange rate is 4/3. Which of
the following prices for a particular good are consistent with these exchange rates?
a. $4 in the U.S. and 3 euros in Italy.
b. $4 in the U.S. and 3.75 euros in Italy.
c. $5 in the U.S. and 3 euros in Italy.
d. $6 in the U.S. and 2.50 euros in Italy.

34. The exchange rate is 1.5 Bosnian markas per U.S. dollar. The price of a refrigerator in Bosnia
is 1,200 markas while in the U.S. it is $1,000. The real exchange rate is
a. 9/5
b. 5/4
c. 4/5
d. None of the above are correct.

35. In the U.S. a digital camera costs $200. The same camera in London sells for 90 pounds. If
the exchange rate were .50 pounds per dollar, then which of the following would be correct?
a. The real exchange rate is greater than 1. A person in London with $200 could exchange them
for pounds and have more than enough to buy the camera there.
b. The real exchange rate is greater than 1. A person in London with $200 could exchange them
for pounds but then wouldn’t have enough to buy the camera there.
c. The real exchange rate is less than 1. A person in London with $200 could exchange them for
pounds and have more than enough to buy the camera there.
d. The real exchange rate is less than 1. A person in London with $200 could exchange them for
pounds but then wouldn’t have enough to buy the camera.

36. The price of a basket of goods and services in the U.S. is $600. In Canada the same basket of
goods costs 700 Canadian dollars. If the nominal exchange rate were 1.2 Canadian dollars per
U.S. dollar, what would be the real exchange rate?
a. 700/600
b. 600/700
c. 700/720
d. None of the above is correct.

37. In the United States, a three-pound can of coffee costs about $5. If the exchange rate is 0.8
euros per dollar and a three-pound can of coffee in Belgium costs 7 euros. What is the real
exchange rate?
a. 7/4 cans of Belgian coffee per can of U.S. coffee
b. 5.6/5 cans of Belgian coffee per can of U.S. coffee
c. 5/5.6 cans of Belgian coffee per can of U.S. coffee
d. 4/7 cans of Belgian coffee per can of U.S. coffee

38. In the United States, a cup of hot chocolate costs $5. In a foreign country, the same hot
chocolate costs 6.5 units of that country’s currency. If the exchange rate were 1.3 units of foreign
currency per U.S. dollar, what is the real exchange rate?
a. 1/2 cup of that country’s hot chocolate per cup of U.S. hot chocolate
b. 1 cup of that country’s hot chocolate per cup of U.S. hot chocolate
c. 2 cups of that country’s hot chocolate per cup of U.S. hot chocolate
d. None of the above is correct.

39. In Ireland, a pint of beer costs 3 euros. In Australia, a pint of beer costs 4 Australian dollars.
If the exchange rate is .8 euros per Australian dollar, what is the real exchange rate?
a. 4/2.4 pints of Irish beer per pint of Australian beer
b. 3/3.2 pint of Irish beer per pint of Australian beer
c. 3.2/3 pints of Irish beer per pint of Australian beer
d. 2.4/4 pints of Irish beer per pint of Australian beer

40. In France a loaf of bread costs 3 euros. In Great Britain a loaf of bread costs 4 pounds. If the
exchange rate is .9 pounds per euro, what is the real exchange rate?
a. 4/2.7 loaves of British bread per loaf of French bread
b. 3.6/3 loaves of British bread per loaf of French bread
c. 3/3.6 loaves of British bread per loaf of French bread
d. 2.7/4 loaves of British bread per loaf of French bread

41. If a bushel of wheat costs $6.40 in the United States, costs 40 pesos in Mexico, and the
nominal exchange rate is 10 pesos per dollar, then the real exchange rate is
a. 1.60
b. 1.25
c. .625
d. None of the above is correct.

42. The nominal exchange rate is 30 Thai bhat for one U.S. dollar. A sub sandwich combo deal
in the U.S. costs $6 dollars in the U.S. and 120 bhat in Thailand. The real exchange rate is
a. 3/8
b. 2/3
c. 3/2
d. 8/3

43. If the price of a sofa is $800 in the U.S. and 2400 pesos in Argentina, and the exchange rate
is 4 pesos per dollar, what is the real exchange rate?
a. 3
b. 4/3
c. 3/4
d. None of the above is correct.

44. If the unit of foreign currency is the peso, in which case is the real exchange rate 1.2?
a. the U.S. price is $2, the foreign price is 5 pesos, and the exchange rate is 3 pesos per dollar.
b. the U.S. price is $3, the foreign price is 18 pesos, and the exchange rate is 5 pesos per dollar.
c. the U.S. price is $5, the foreign price 12 pesos, and the exchange rate is 2 pesos per dollar.
d. the U.S. price is $10, the foreign price is 3 pesos, and the exchange rate is 4 pesos per dollar.

45. If the price of a good in the U.S. is $10 and the unit of foreign currency is the dinar, in which
case is the real exchange rate 5/4?
a. the foreign price is 4 dinars and the exchange rate is 1/2 dinars per dollar
b. the foreign price is 5 dinars and the exchange rate is 2.5 dinars per dollar
c. the foreign price is 4 dinars and the exchange rate is 2 dinars per dollar
d. the foreign price is 5 dinars and the exchange rate is 2/5 dinars per dollar

46. In the U.S. a candy bar costs $1. If the nominal exchange rate were 6 Chinese yuan per dollar
and the real exchange rate were 1.2, then, what would be the price of a candy bar in China?
a. 7.2 yuan
b. 6 yuan
c. 5 yuan
d. 3.6 yuan

47. Suppose the real exchange rate is 1.25 pounds of bananas in Guatemala per pound of bananas
in the U.S. If a pound of bananas in the U.S. costs $.50, and the exchange rate is 10 Guatemalan
Quetzals per dollar, what is the price of bananas in Guatemala?
a. 2.50 Quetzals per pound
b. 4.00 Quetzals per pound
c. 5.75 Quetzals per pound
d. 6.25 Quetzals per pound
48. If the real exchange rate between the U.S. and Japan is 1, the nominal exchange rate is 100
yen per U.S. dollar and the price of chicken in the U.S. is $2.50 per pound, what is the price of
chicken in Japan?
a. 400 yen per pound
b. 250 yen per pound
c. 100 yen per pound
d. 40 yen per pound

49. If the real exchange rate is 5/4 pounds of Chilean beef per pound of U.S. beef, a pound of
U.S. beef costs $2 and the nominal exchange rate is 500 Chilean pesos per dollar, then Chilean
beef costs
a. 1,250 pesos per pound.
b. 800 pesos per pound
c. 250 pesos per pound.
d. None of the above is correct.

50. Suppose the real exchange rate is 3/4 gallon of country A’s gasoline per gallon of U.S.
gasoline, a gallon of U.S. gasoline costs $3.00 U.S., and a gallon of gas in country A costs 6
units of their currency. What is the nominal exchange rate?
a. 3/8 of a unit of country A’s currency per dollar.
b. 3/2 units of country A’s currency per dollar.
c. 8/3 units of country A’s currency per dollar.
d. None of the above is correct.

51. Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S.
textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest penny, what
is the nominal exchange rate?
a. .64 Canadian dollars per U.S. dollar
b. 1 Canadian dollar per U.S. dollar
c. 1.56 Canadian dollars per U.S. dollar
d. None of the above is correct.

52. If the real exchange rate for coal is 1.5, the price of coal in the U.S. is $50 per ton, and the
price of coal in Britain is 20 British pounds per ton, what is the nominal exchange rate?
a. 15/4
b. 5/3
c. 3/5
d. 4/15

53. Goods that cost one dollar in the U.S. cost one euro in France, the real exchange rate would
be computed as how many French goods per U.S. goods?
a. one
b. the price of the U.S. goods
c. the number of euros that can be bought with one U.S. dollar
d. None of the above is correct.
54. Good that cost one half dollar in the U.S. cost one euro in Germany, the real exchange rate
would be computed as how many German goods per U.S. goods?
a. one half
b. one half the price of the U.S. goods
c. one half the number of euros it takes to buy a U.S. dollar
d. None of the above is correct.

55. Goods that cost 1/5 of one dollar in the U.S. cost one kroner in Denmark, the real exchange
rate would be computed as how many Danish goods per U.S. goods?
a. five
b. the amount of kroner that can be bought with twenty U.S. cents
c. the amount of kroner that can be bought with 5 dollars
d. None of the above is correct.

56. If it took as many dollars to buy goods in the United States as it did to buy enough currency
to buy the same goods in India, the real exchange rate would be computed as how many Indian
goods per U.S. goods?
a. one
b. the number of dollars needed to buy U.S. goods divided by the number of rupees needed to
buy Indian goods
c. the number of rupees needed to buy Indian goods divided by the number of dollars needed to
buy U.S. goods
d. None of the above is correct.

57. Suppose that the real exchange rate between the United States and Kenya 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 Kenyan goods a basket of U.S. goods
buys)?
a. an increase in the number of Kenyan shillings that can be purchased with a dollar
b. an increase in the price of U.S. goods
c. a decrease in the price in Kenyan shillings of Kenyan goods
d. All of the above are correct.

58. Suppose that the real exchange rate between the United States and Brazil 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 Brazilian goods a basket of U.S. goods
buys)?
a. an increase in the quantity of Brazilian currency that can be purchased with a dollar
b. a decrease in the price of U.S. goods
c. an increase in the price in Brazilian currency of Brazilian goods
d. All of the above are correct.

59. 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.

60. Consider an identical basket of goods in both the U.S. and Taiwan. For a given nominal
exchange rate, in which case is it certain that the U.S. real exchange rate with Taiwan falls?
a. the price of the basket of goods rises in the U.S. and Taiwan.
b. the price of the basket of goods rises in the U.S. and falls in Taiwan.
c. the price of the basket of goods falls in the U.S. and rises in Taiwan.
d. the price of the basket of goods falls in both the U.S. and Taiwan.

61. A good in the U.S. costs $20. The same good costs 150 pesos in Mexico. If the nominal
exchange rate is 10 pesos per dollar, what is the real exchange rate?
a. 4/3 so the good is more expensive in the U.S.
b. 4/3 so the good is more expensive in Mexico
c. 3/4 so the good is more expensive in the U.S.
d. 3/4 so the good is more expensive in Mexico

62. A depreciation of the U.S. real exchange rate induces U.S. consumers to buy
a. fewer domestic goods and fewer foreign goods.
b. more domestic goods and fewer foreign goods.
c. fewer domestic goods and more foreign goods.
d. more domestic goods and more foreign goods.

63. An appreciation of the U.S. real exchange rate induces U.S. consumers to buy
a. fewer domestic goods and fewer foreign goods.
b. more domestic goods and fewer foreign goods.
c. fewer domestic goods and more foreign goods.
d. more domestic goods and more foreign goods.

64. If the U.S. real exchange rate appreciates, U.S. exports

a. increase and U.S. imports decrease.
b. decrease and U.S. imports increase.
c. and U.S. imports both increase.
d. and U.S. imports both decrease.

65. Other things the same, which of the following could be a consequence of an appreciation of
the U.S. real exchange rate?
a. John, a French citizen, decides that Iowa pork is now relatively less expensive and orders more
for his restaurant.
b. Nick, a U.S. citizen, decides that the trip to Nepal he’s been thinking about is now affordable.
c. Roberta, a U.S. citizen, decides to import fewer windshield wipers for her auto parts company.
d. All of the above are correct.
66. Other things the same, if the U.S. real exchange rate appreciates, U.S. net exports
a. increase and U.S. net capital outflow decreases.
b. decrease and U.S. net capital outflow increases.
c. and U.S. net capital outflow both increase.
d. and U.S. net capital outflow both decrease.

67. If the number of Japanese yen a dollar buys falls, but neither country’s price level changes,
then the real exchange rate
a. depreciates which causes U.S. net exports to increase.
b. depreciates which causes U.S. net exports to decrease.
c. appreciates which causes U.S. net exports to increase.
d. appreciates, which causes U.S. net exports to decrease.

68. When the Mexican peso gets "stronger" relative to the dollar,
a. the U.S. trade deficit with Mexico rises.
b. the U.S. trade deficit with Mexico falls.
c. the U.S. trade deficit with Mexico is unchanged.
d. None of the above necessarily happens.

69. If the U.S. real exchange rate appreciates, U.S. exports to Europe
a. and European exports to the U.S. both rise.
b. and European exports to the U.S. both fall.
c. rise, and European exports to the U.S. fall.
d. fall, and European exports to the U.S. rise.

70. Suppose that the nominal exchange rate is 80 yen per dollar, that the price of a basket of
goods in the U.S. is $500 and the price of a basket of goods in Japan is 50,000 yen. Suppose that
these values change to 100 yen per dollar, $600, and 70,000 yen. Then the real exchange rate
would
a. appreciate which by itself would make U.S. net exports fall.
b. appreciate which by itself would make U.S. net exports rise.
c. depreciate which by itself would make U.S. net exports fall.
d. depreciate which by itself would make U.S. net exports rise.

71. Suppose that the nominal exchange rate is .80 euro per dollar, that the price of a basket of
goods in the U.S. is $500 and the price of a basket of goods in Germany is 400 Euro. Suppose
that these values change to .90 euro per dollar, $600, and 600 euro. Then the real exchange rate
would
a. appreciate which by itself would make U.S. net exports fall.
b. appreciate which by itself would make U.S. net exports rise.
c. depreciate which by itself would make U.S. net exports fall.
d. depreciate which by itself would make U.S. net exports rise.

72. If the U.S. has a trade deficit and the nominal exchange rate depreciates, then other things the
same
a. the trade deficit rises and net capital outflow rises.
b. the trade deficit rises and net capital outflow falls.
c. the trade deficit falls and net capital outflows rise.
d. the trade deficit falls and net capital outflows fall.

73. Other things the same, which of the following would both make Americans more willing to
buy Italian goods?
a. the nominal exchange rate falls, the price of goods in Italy falls
b. the nominal exchange rate falls, the price of goods in Italy rises
c. the nominal exchange rate rises, the price of goods in Italy falls
d. the nominal exchange rate rises, the price of goods in Italy rises

74. 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 foreign 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.

75. 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 then 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 foreign 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 then 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.

76. Suppose that in 2015 the nominal exchange rate was 9 Egyptian pounds per dollar, the price
of a basket of goods in the U.S. was $600 and the price of the same basket of goods in Egypt was
6000 pounds. Suppose that in 2016 these values were 10 Egyptian pounds per dollar, $620, and
7200 pounds. From 2015 to 2016 U.S. real exchange rate
a. appreciated which by itself would make U.S. net exports fall.
b. appreciated which by itself would make U.S. net exports rise.
c. depreciated which by itself would make U.S. net exports fall.
d. depreciated which by itself would make U.S. net exports rise.

77. If the number of South Korean Won it takes to buy a U.S. dollar rises and the prices of U.S.
goods rise more than the prices of South Korean goods. then the US real exchange rate
a. appreciates and so U.S. net exports fall.
b. appreciates and so U.S. net exports rise.
c. depreciates and so U.S. net exports fall.
d. depreciates and so U.S. net exports rise.
78. A particular brand of shampoo costs 6 Canadian dollars in Toronto. The nominal exchange
rate is about 1.2 and the real exchange rate is .90. These numbers imply that the U.S. dollar price
of the same shampoo is about
a. $7.99
b. $6.49
c. $5.39
d. $4.49

79. A particular brand of toothpaste costs 4 British pounds in London. The nominal exchange
rate is .80 and the real exchange rate is about 1.16. These numbers imply that the U.S. price of
the same toothpaste is about
a. $5.79
b. $4.29
c. $3.70
d. $2.76