Q1. Assuming no changes in the prices of a representative consumption basket in two currency areas over the measurement period, the nominal exchange rate:

A)   can be extrapolated to calculate interest rates.

B)   can be converted to the real exchange rate using interest rates.

C)   is equal to the real exchange rate.

Q2. In the currency market, traders quote the:

A)   nominal exchange rate.

B)   base currency rate.

C)   real exchange rate.

Q3. If we compare the prices of goods in two countries through time, we can use the price information in concert with the quoted foreign exchange rate to calculate the:

A)   real exchange rate.

B)   interest rate spread.

C)   nominal exchange rate.

答案和详解如下：

Q1. Assuming no changes in the prices of a representative consumption basket in two currency areas over the measurement period, the nominal exchange rate:

A)   can be extrapolated to calculate interest rates.

B)   can be converted to the real exchange rate using interest rates.

C)   is equal to the real exchange rate.

Correct answer is C)

The real interest rate = the nominal interest rate × ratio of consumption basket (or index) price levels in both countries. Assuming no price changes, the real exchange rate has remained the same as the nominal interest rate during the period.

Q2. In the currency market, traders quote the:

A)   nominal exchange rate.

B)   base currency rate.

C)   real exchange rate.

Correct answer is A)

The nominal exchange rate is quite simply the price of one currency relative to another. It is the quote observed in currency markets.

Q3. If we compare the prices of goods in two countries through time, we can use the price information in concert with the quoted foreign exchange rate to calculate the:

A)   real exchange rate.

B)   interest rate spread.

C)   nominal exchange rate.

Correct answer is A)

A comparison of consumption costs between two markets can, in concert with the foreign exchange rate (also called the nominal exchange rate), be used to calculate the real exchange rate.

vss

Thanks