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.
b.
c.
d.
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