Quiz 4 answer - 1 The following table provides the nominal...

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1) The following table provides the nominal exchange rates for the Australian dollar. Country Foreign currency per Australian dollar United States dollar 0.7689 Japanese yen 82.2400 Based on this data, the nominal exchange rate equals ____ yen per US dollar, or equivalently, _____ US dollars per yen. a. 0.0093; 106.9580 b. 0.7689; 1.3006 c. 1.3006; 0.7689 *d. 106.9580; 0.0093 2) If the nominal exchange rate is 1.730 Swiss francs per US dollar, and 1.053 Brazilian reals per Swiss franc, then there are ____ Brazilian reals per US dollar. a. 1.643 b. 0.609 *c. 1.822 d. 0.578 3) A decrease in the nominal exchange rate, e , defined as the number of units of the foreign currency that the domestic currency will buy, indicates that the domestic currency has ______ relative to the foreign currency. a. appreciated *b. depreciated c. become overvalued d. become undervalued 4) Assume that the price levels in two countries are constant. In this situation, we know that: a. neither the real nor the nominal exchange rate can change. b. the real exchange rate can change, while the nominal exchange rate is constant. c. the nominal exchange rate can change, while the real exchange rate is constant. *d. the real and nominal exchange rate must move together, changing by the same percentage.
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5) Between 1973 and 1999, annual inflation in developing nations that export mainly manufactured goods averaged 23 percent, compared with an average 59 percent in countries that mainly export raw materials. Other things being equal, the PPP theory would predict that, in the long run, the currencies of the countries exporting raw materials should have a. been approximately stable relative to the currencies of countries exporting manufactured goods. b. appreciated relative to the currencies of countries exporting manufactured goods. *c. depreciated relative to the currencies of countries exporting manufactured goods. d. had no predictable relationship to the currencies of countries exporting manufactured goods. 6) Tighter monetary policy in Australia ____ net exports through a _____ Australian
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Quiz 4 answer - 1 The following table provides the nominal...

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