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If We Let P = the Domestic Price of a Basket

Question 18

Multiple Choice

If we let P = the domestic price of a basket of goods and Pf the foreign price of the same basket of goods measured in domestic currency:


A) If If we let P = the domestic price of a basket of goods and P<sub>f</sub> the foreign price of the same basket of goods measured in domestic currency: A) If > 1 foreign products will seem inexpensive. B) If > 1 foreign products will seem expensive. C) If = 1 the nominal exchange rate is also = 1. D) You cannot determine the relative prices of foreign goods from the equation . > 1 foreign products will seem inexpensive.
B) If If we let P = the domestic price of a basket of goods and P<sub>f</sub> the foreign price of the same basket of goods measured in domestic currency: A) If > 1 foreign products will seem inexpensive. B) If > 1 foreign products will seem expensive. C) If = 1 the nominal exchange rate is also = 1. D) You cannot determine the relative prices of foreign goods from the equation . > 1 foreign products will seem expensive.
C) If If we let P = the domestic price of a basket of goods and P<sub>f</sub> the foreign price of the same basket of goods measured in domestic currency: A) If > 1 foreign products will seem inexpensive. B) If > 1 foreign products will seem expensive. C) If = 1 the nominal exchange rate is also = 1. D) You cannot determine the relative prices of foreign goods from the equation . = 1 the nominal exchange rate is also = 1.
D) You cannot determine the relative prices of foreign goods from the equation If we let P = the domestic price of a basket of goods and P<sub>f</sub> the foreign price of the same basket of goods measured in domestic currency: A) If > 1 foreign products will seem inexpensive. B) If > 1 foreign products will seem expensive. C) If = 1 the nominal exchange rate is also = 1. D) You cannot determine the relative prices of foreign goods from the equation . .

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