Question 1

If the real exchange rate between the U.S. and Japan is 1, the nominal exchange rate is 100 yen per U.S. dollar and the price of chicken in the U.S. is $2.50 per pound, what is the price of chicken in Japan?
A)400 yen per pound
B)250 yen per pound
C)100 yen per pound
D)40 yen per pound

Accepted Answer

If the nominal exchange rate is 100 yen per U.S. dollar, then 1 U.S. dollar equals 100 yen.

Since the real exchange rate is 1, this means that the price of goods in the U.S. and Japan should be equal if they are converted to the same currency.

Therefore, the price of chicken in Japan should be the same as the price in the U.S., once converted to yen.

$2.50 per pound = 250 cents per pound

250 cents per pound x (100 yen / 1 U.S. dollar) = 25,000/100 yen per pound = 250 yen per pound.

Thus, the price of chicken in Japan is 250 yen per pound.

Question 2

Goods that cost one dollar in the U.S. cost one euro in France, the real exchange rate would be computed as how many French goods per U.S. goods?
A)one
B)the price of the U.S. goods
C)the number of euros that can be bought with one U.S. dollar
D)None of the above is correct.

Accepted Answer

The real exchange rate is the rate at which one country's currency can be exchanged for another country's currency to buy the same amount of goods. In this case, since goods cost one dollar in the U.S. and one euro in France, the exchange rate would be how many euros can be bought with one U.S. dollar, which is choice C.

Question 3

Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S. textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest penny, what is the nominal exchange rate?
A).64 Canadian dollars per U.S. dollar
B)1 Canadian dollar per U.S. dollar
C)1.56 Canadian dollars per U.S. dollar
D)None of the above is correct.

Accepted Answer

The answer of Suppose the real exchange rate is 5/4...

Question 4

The nominal exchange rate is 30 Thai bhat for one U.S. dollar. A sub sandwich combo deal in the U.S. costs $6 dollars in the U.S. and 120 bhat in Thailand. The real exchange rate is
A)3/8
B)2/3
C)3/2
D)8/3

Accepted Answer

The answer of The nominal exchange rate is 30 Thai...

Question 5

In the United States, a three-pound can of coffee costs about $5. If the exchange rate is 0.8 euros per dollar and a three-pound can of coffee in Belgium costs 7 euros. What is the real exchange rate?
A)7/4 cans of Belgian coffee per can of U.S. coffee
B)5.6/5 cans of Belgian coffee per can of U.S. coffee
C)5/5.6 cans of Belgian coffee per can of U.S. coffee
D)4/7 cans of Belgian coffee per can of U.S. coffee

Accepted Answer

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

Question 6

Suppose the real exchange rate is 3/4 gallon of country A's gasoline per gallon of U.S. gasoline, a gallon of U.S. gasoline costs $3.00 U.S., and a gallon of gas in country A costs 6 units of their currency. What is the nominal exchange rate?
A)3/8 of a unit of country A's currency per dollar.
B)3/2 units of country A's currency per dollar.
C)8/3 units of country A's currency per dollar.
D)None of the above is correct.

Accepted Answer

The answer of Suppose the real exchange rate is 3/4...

Question 7

If the real exchange rate is 5/4 pounds of Chilean beef per pound of U.S. beef, a pound of U.S. beef costs $2 and the nominal exchange rate is 500 Chilean pesos per dollar, then Chilean beef costs
A)1,250 pesos per pound.
B)800 pesos per pound
C)250 pesos per pound.
D)None of the above is correct.

Accepted Answer

If a pound of U.S. beef costs $2, then it costs 2 * 500 = 1000 Chilean pesos. 
The real exchange rate is 5/4 pounds of Chilean beef per pound of U.S. beef, so one pound of Chilean beef costs (4/5) * 1000 = 800 Chilean pesos. 
Therefore, the answer is B, 800 pesos per pound.

Question 8

If the price of a good in the U.S. is $10 and the unit of foreign currency is the dinar, in which case is the real exchange rate 5/4?
A)the foreign price is 4 dinars and the exchange rate is 1/2 dinars per dollar
B)the foreign price is 5 dinars and the exchange rate is 2.5 dinars per dollar
C)the foreign price is 4 dinars and the exchange rate is 2 dinars per dollar
D)the foreign price is 5 dinars and the exchange rate is 2/5 dinars per dollar

Accepted Answer

The answer of If the price of a good in...

Question 9

In the United States, a cup of hot chocolate costs $5. In a foreign country, the same hot chocolate costs 6.5 units of that country's currency. If the exchange rate were 1.3 units of foreign currency per U.S. dollar, what is the real exchange rate?
A)1/2 cup of that country's hot chocolate per cup of U.S. hot chocolate
B)1 cup of that country's hot chocolate per cup of U.S. hot chocolate
C)2 cups of that country's hot chocolate per cup of U.S. hot chocolate
D)None of the above is correct.

Accepted Answer

To find the real exchange rate, we need to compare the cost of one cup of hot chocolate in the foreign currency to the cost of one cup of hot chocolate in U.S. dollars.

One cup of hot chocolate in the U.S. costs $5, and in the foreign country, it costs 6.5 units of currency.

To convert 6.5 units of currency into U.S. dollars, we need to divide by the exchange rate:

6.5 units / 1.3 units per dollar = $5

This means that one cup of hot chocolate in the foreign country has the same value as $5 in the U.S.

Therefore, the real exchange rate is 1 cup of that country's hot chocolate per cup of U.S. hot chocolate.

Question 10

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 were 1.2 Canadian dollars per U.S. dollar, what would be the real exchange rate?
A)700/600
B)600/700
C)700/720
D)None of the above is correct.

Accepted Answer

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

Question 11

Suppose the real exchange rate is 1.25 pounds of bananas in Guatemala per pound of bananas in the U.S. If a pound of bananas in the U.S. costs $.50, and the exchange rate is 10 Guatemalan Quetzals per dollar, what is the price of bananas in Guatemala?
A)2.50 Quetzals per pound
B)4.00 Quetzals per pound
C)5.75 Quetzals per pound
D)6.25 Quetzals per pound

Accepted Answer

The answer of Suppose the real exchange rate is 1.25...

Question 12

In France a loaf of bread costs 3 euros. In Great Britain a loaf of bread costs 4 pounds. If the exchange rate is .9 pounds per euro, what is the real exchange rate?
A)4/2.7 loaves of British bread per loaf of French bread
B)3.6/3 loaves of British bread per loaf of French bread
C)3/3.6 loaves of British bread per loaf of French bread
D)2.7/4 loaves of British bread per loaf of French bread

Accepted Answer

To find the real exchange rate, we need to convert the cost of French bread into pounds.

3 euros * 0.9 pounds/euro = 2.7 pounds

So in Great Britain, a loaf of French bread costs 2.7 pounds.

Now we can compare the cost of British and French bread:

2.7 pounds per loaf of French bread / 4 pounds per loaf of British bread = 0.675

So for every 1 loaf of French bread, you can buy 0.675 loaves of British bread.

Simplifying, we get:

2.7/4 loaves of British bread per loaf of French bread

Therefore, the answer is D.

Question 13

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
A)9/5
B)5/4
C)4/5
D)None of the above are correct.

Accepted Answer

To find the real exchange rate, we need to see how much it costs to buy the same product in both countries after accounting for the exchange rate. 
In Bosnia, the refrigerator costs 1,200 markas. 
In the U.S., the refrigerator would cost 1,000/1.5 = 666.67 markas. 
So, the real exchange rate is 1,200/666.67 = 1.8. 
Simplifying this fraction, we get 5/4, which is the same as choice B.

Question 14

In the U.S. a candy bar costs $1. If the nominal exchange rate were 6 Chinese yuan per dollar and the real exchange rate were 1.2, then, what would be the price of a candy bar in China?
A)7.2 yuan
B)6 yuan
C)5 yuan
D)3.6 yuan

Accepted Answer

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

Question 15

If the real exchange rate for coal is 1.5, the price of coal in the U.S. is $50 per ton, and the price of coal in Britain is 20 British pounds per ton, what is the nominal exchange rate?
A)15/4
B)5/3
C)3/5
D)4/15

Accepted Answer

The answer of If the real exchange rate for coal...

Question 16

In Ireland, a pint of beer costs 3 euros. In Australia, a pint of beer costs 4 Australian dollars. If the exchange rate is .8 euros per Australian dollar, what is the real exchange rate?
A)4/2.4 pints of Irish beer per pint of Australian beer
B)3/3.2 pint of Irish beer per pint of Australian beer
C)3.2/3 pints of Irish beer per pint of Australian beer
D)2.4/4 pints of Irish beer per pint of Australian beer

Accepted Answer

The answer of In Ireland, a pint of beer costs...

Question 17

If a bushel of wheat costs $6.40 in the United States, costs 40 pesos in Mexico, and the nominal exchange rate is 10 pesos per dollar, then the real exchange rate is
A)1.60
B)1.25
C).625
D)None of the above is correct.

Accepted Answer

To calculate the real exchange rate, we need to use the formula:
Real Exchange Rate = (Nominal Exchange Rate x Domestic Price) / Foreign Price
In this case, we'll use the United States as the domestic country and Mexico as the foreign country.
Real Exchange Rate = (10 pesos per dollar x $6.40) / 40 pesos
Real Exchange Rate = $64 pesos / 40 pesos
Real Exchange Rate = 1.6
Therefore, the real exchange rate is 1.60, which corresponds with choice A.

Question 18

If the unit of foreign currency is the peso, in which case is the real exchange rate 1.2?
A)the U.S. price is $2, the foreign price is 5 pesos, and the exchange rate is 3 pesos per dollar.
B)the U.S. price is $3, the foreign price is 18 pesos, and the exchange rate is 5 pesos per dollar.
C)the U.S. price is $5, the foreign price 12 pesos, and the exchange rate is 2 pesos per dollar.
D)the U.S. price is $10, the foreign price is 3 pesos, and the exchange rate is 4 pesos per dollar.

Accepted Answer

The answer of If the unit of foreign currency is...

Question 19

If the price of a sofa is $800 in the U.S. and 2400 pesos in Argentina, and the exchange rate is 4 pesos per dollar, what is the real exchange rate?
A)3
B)4/3
C)3/4
D)None of the above is correct.

Accepted Answer

The answer of If the price of a sofa is...

Question 20

In the U.S. a digital camera costs $200. The same camera in London sells for 90 pounds. If the exchange rate were .50 pounds per dollar, then which of the following would be correct?
A)The real exchange rate is greater than 1. A person in London with $200 could exchange them for pounds and have more than enough to buy the camera there.
B)The real exchange rate is greater than 1. A person in London with $200 could exchange them for pounds but then wouldn't have enough to buy the camera there.
C)The real exchange rate is less than 1. A person in London with $200 could exchange them for pounds and have more than enough to buy the camera there.
D)The real exchange rate is less than 1. A person in London with $200 could exchange them for pounds but then wouldn't have enough to buy the camera.

Accepted Answer

The answer of In the U.S. a digital camera costs...

Quiz 31: Open-Economy Macroeconomics: Basic Concepts

If the real exchange rate between the U.S. and Japan is 1, the nominal exchange rate is 100 yen per U.S. dollar and the price of chicken in the U.S. is $2.50 per pound, what is the price of chicken in Japan?

Goods that cost one dollar in the U.S. cost one euro in France, the real exchange rate would be computed as how many French goods per U.S. goods?

Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S. textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest penny, what is the nominal exchange rate?

The nominal exchange rate is 30 Thai bhat for one U.S. dollar. A sub sandwich combo deal in the U.S. costs $6 dollars in the U.S. and 120 bhat in Thailand. The real exchange rate is

In the United States, a three-pound can of coffee costs about $5. If the exchange rate is 0.8 euros per dollar and a three-pound can of coffee in Belgium costs 7 euros. What is the real exchange rate?

Suppose the real exchange rate is 3/4 gallon of country A's gasoline per gallon of U.S. gasoline, a gallon of U.S. gasoline costs $3.00 U.S., and a gallon of gas in country A costs 6 units of their currency. What is the nominal exchange rate?

If the real exchange rate is 5/4 pounds of Chilean beef per pound of U.S. beef, a pound of U.S. beef costs $2 and the nominal exchange rate is 500 Chilean pesos per dollar, then Chilean beef costs

If the price of a good in the U.S. is $10 and the unit of foreign currency is the dinar, in which case is the real exchange rate 5/4?

In the United States, a cup of hot chocolate costs $5. In a foreign country, the same hot chocolate costs 6.5 units of that country's currency. If the exchange rate were 1.3 units of foreign currency per U.S. dollar, what is the real exchange rate?

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 were 1.2 Canadian dollars per U.S. dollar, what would be the real exchange rate?

Suppose the real exchange rate is 1.25 pounds of bananas in Guatemala per pound of bananas in the U.S. If a pound of bananas in the U.S. costs $.50, and the exchange rate is 10 Guatemalan Quetzals per dollar, what is the price of bananas in Guatemala?

In France a loaf of bread costs 3 euros. In Great Britain a loaf of bread costs 4 pounds. If the exchange rate is .9 pounds per euro, what is the real exchange rate?

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

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

If the real exchange rate for coal is 1.5, the price of coal in the U.S. is $50 per ton, and the price of coal in Britain is 20 British pounds per ton, what is the nominal exchange rate?

In Ireland, a pint of beer costs 3 euros. In Australia, a pint of beer costs 4 Australian dollars. If the exchange rate is .8 euros per Australian dollar, what is the real exchange rate?

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

If the unit of foreign currency is the peso, in which case is the real exchange rate 1.2?

If the price of a sofa is $800 in the U.S. and 2400 pesos in Argentina, and the exchange rate is 4 pesos per dollar, what is the real exchange rate?

In the U.S. a digital camera costs $200. The same camera in London sells for 90 pounds. If the exchange rate were .50 pounds per dollar, then which of the following would be correct?