Asked by
Pablo Machado
on Nov 16, 2024Verified
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.
Real Exchange Rate
The rate at which two currencies can be exchanged after adjusting for inflation differentials, reflecting the purchasing power of one currency in terms of goods and services.
Domestic Goods
Products that are manufactured within a country's borders, as opposed to goods imported from other countries.
Foreign Goods
Products that are produced in one country and then imported and sold in another country.
- Analyze how changes in currency valuation influence international commerce and investment activities.
Verified Answer
LB
Learning Objectives
- Analyze how changes in currency valuation influence international commerce and investment activities.