By how much does the real, bilateral exchange rate change when the nominal, bilateral exchange rate changes from $1.40/£ to $1.60/£, the U.S. tradable basket from $2,100 to $2,200 and the British tradable basket from £1,500 to £1,600?
a. The real exchange rate rises by 16.35%.
b. The real exchange rate falls by 3.1%
c. The real exchange rate rises by 3.1%
d. The real exchange rate falls by 10.8%
e. The real exchange rate falls by 12.5%
.A
You might also like to view...
Which of the following could lead to an inward shift of the production possibilities frontier?
a. an increase in the cost of one good b. an increase in the utilization of resources c. a rise in the level of technology d. a law is passed whereby a mandatory retirement age of 60 is imposed e. a decrease in the utilization of resources
Monopolies are characterized by all of the following, except one. Which is the exception?
a. a downward-sloping demand curve b. potential for long-run profits c. a perfectly elastic demand curve d. barriers to entry e. no close substitutes for the good produced