Question 1

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 is 1.2 Canadian dollars per U.S.dollar,what is the real exchange rate?

Accepted Answer

The answer of The price of a basket of goods...

Question 2

If a bushel of wheat costs $6.40 in the United States and costs 40 pesos in Mexico and the nominal exchange rate is 10 pesos per dollar,then the real exchange rate is

Accepted Answer

The real exchange rate is calculated as (Nominal Exchange Rate * Domestic Price) / Foreign Price. Here, it is (10 pesos/dollar * $6.40) / 40 pesos = 1.60.

Question 3

If the exchange rate changes from 135 Kazakhstan tenge per dollar to 150 Kazakhstan tenge per dollar,the dollar has

Accepted Answer

The answer of If the exchange rate changes from 135...

Question 4

Exchange rates are 120 yen per dollar,0.8 euro per dollar,and 10 pesos per dollar.A bottle of beer in New York costs 6 dollars,1,200 yen in Tokyo,7.2 euro in Munich,and 50 pesos in Cancun.Where is the most expensive and the cheapest beer in that order?

Accepted Answer

The answer of Exchange rates are 120 yen per dollar,0.8...

Question 5

The nominal exchange rate is 2 Thai bhat for one U.S.dollar.A sub sandwich combo deal in the U.S.costs $6 dollars in the U.S.and 8 bhat in Thailand.The real exchange rate is

Accepted Answer

The real exchange rate is calculated as (Nominal Exchange Rate * Price of Good in Domestic Country) / Price of Good in Foreign Country. Here, it is (2 * 6) / 8 = 12/8 = 3/2.

Question 6

If a dollar currently purchases 10 pesos and someone forecasts that in a year it will be 11 pesos,then the forecast is given in

Accepted Answer

The forecast is given in nominal terms because it refers to the exchange rate without adjusting for inflation. It implies the dollar will appreciate because it will be able to purchase more pesos in the future (11 pesos instead of 10).

Question 7

Other things the same,the real exchange rate between American and British goods would be higher if

Accepted Answer

A higher real exchange rate means that American goods are relatively cheaper compared to British goods. This can happen if either the prices of British goods are lower or the number of pounds a dollar purchases is higher. Therefore, the correct option is C where the prices of British goods are lower or the number of pounds a dollar purchases is higher.

Question 8

In the United States,a three-pound can of coffee costs about $5.If the exchange rate is about 0.6 euros per dollar and a three-pound can of coffee in Belgium costs about 4 euros.What is the real exchange rate?

Accepted Answer

The answer of In the United States,a three-pound can of...

Question 9

In the United States,a cup of hot chocolate costs $5.In Australia,the same hot chocolate costs $6.5 Australian dollars.If the exchange rate is $1.3 Australian dollars per U.S.dollar,what is the real exchange rate?

Accepted Answer

The answer of In the United States,a cup of hot...

Question 10

Other things the same,the real exchange rate between U.S.and South African goods would be higher if

Accepted Answer

The real exchange rate increases if U.S. prices rise or if the dollar appreciates, meaning it buys more South African rand.

Question 11

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?

Accepted Answer

To find the real exchange rate, we need to compare the prices of the same item in both currencies. We know that the price of an MP3 player in Paris is 150 euros, and the price of the same MP3 player in the U.S. is $150. To compare these prices, we need to convert one currency to the other using the given exchange rate of .70 euro per dollar:

150 euros = 150/.70 dollars

Simplifying gives us:

150 euros = approximately 214.29 dollars

Now we can compare the prices in dollars:

$150 < $214.29

This means that the euro is stronger than the dollar, and that you get more value for your money in the U.S. Therefore, the real exchange rate is the number of French MP3 players you can buy with one U.S. MP3 player. Since the U.S. price is lower, you can buy more French MP3 players with one U.S. MP3 player. Therefore:

1 U.S. MP3 player = 0.70 French MP3 players

So the answer is C: .70 French MP3 players per U.S. MP3 player.

Question 12

In the U.S.a candy bar costs $1.The nominal exchange rate is 6 Chinese yuan per dollar.If the real exchange rate is 1.2,then,what is the price of a candy bar in China?

Accepted Answer

The answer of In the U.S.a candy bar costs $1.The...

Question 13

The real exchange rate is the nominal exchange rate,defined as foreign currency per dollar,times

Accepted Answer

The real exchange rate is defined as the nominal exchange rate (foreign currency per dollar) multiplied by the ratio of prices in the United States to foreign prices. This is because the real exchange rate accounts for inflation and reflects the purchasing power of each currency in their respective countries. Therefore, the correct choice is B, which states "prices in the United States divided by foreign prices."

Question 14

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

Accepted Answer

The answer of If the nominal exchange rate e is...

Question 15

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

Accepted Answer

To find the real exchange rate, we need to take the price of the refrigerator in Bosnia and convert it to dollars using the exchange rate, and then compare it to the actual price in dollars in the U.S. 
$1,000 / 1.5 = 666.67 markas
Comparing this to the actual price of 1,200 markas in Bosnia, we get:
666.67 / 1,200 = 5/9 or 0.5556
However, we want the reciprocal of this number to get the real exchange rate:
1 / (5/9) = 9/5 or 1.8
Therefore, the closest answer choice is B) 5/4. None of the answer choices are an exact match, but 5/4 is the closest to the actual value of 1.8.

Question 16

In Ireland,a pint of beer costs 2.2 Irish pounds.In Australia,a pint of beer costs 4 Australian dollars.If the exchange rate is .5 pounds per Australian dollar,what is the real exchange rate?

Accepted Answer

The real exchange rate is the price of a good in one country relative to the price of the same good in another country, taking into account the exchange rate. In this case, the price of a pint of beer in Ireland is 2.2 Irish pounds, and the price of a pint of beer in Australia is 4 Australian dollars. The exchange rate is .5 pounds per Australian dollar. So, the real exchange rate is 2.2 Irish pounds / (4 Australian dollars * .5 pounds per Australian dollar) = .91 pints of Irish beer per pint of Australian beer.

Question 17

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?

Accepted Answer

The answer of The nominal exchange rate is .80 euros...

Question 18

In the U.S.a digital camera costs $150.The same camera in London sells for 60 pounds.If the exchange rate is .50 pounds per dollar,then which of the following is correct?

Accepted Answer

The real exchange rate is greater than 1. A person in London with $150 could exchange them for pounds and have more than enough to buy the camera there.

Question 19

The nominal exchange rate is 4 Saudi Arabian riyals,9 Moroccan dirham,45 Indian rupee,or .6 British pounds per U.S.dollar.A double latte espresso and a cinnamon biscotti costs $6 in the U.S. ,24 riyals in Saudi Arabia,45 Moroccan dirham in Morocco,250 Indian rupees in India,and 5 British pounds in Britain.According to these numbers,where is the real exchange rate between American and foreign goods the lowest?

Accepted Answer

The answer of The nominal exchange rate is 4 Saudi...

Question 20

If the exchange rate is 5 units of Peruvian currency per dollar and a hotel room in Lima costs 300 units of Peruvian currency,then how many dollars do you need to get a room?

Accepted Answer

To find out how many dollars are needed to purchase a hotel room for 300 units of Peruvian currency, we need to divide 300 by 5 (the exchange rate). 300/5 = 60. Therefore, you would need 60 dollars to get a room. The fact that the purchase will increase or have no effect on Peru's net exports is not relevant to the answer.

Quiz 31: Open-Economy Macroeconomics: Basic Concepts