Multiple Choice
Suppose that the nominal exchange rate is 120 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.
Correct Answer:
Verified
Correct Answer:
Verified
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