If the price level in the U.S. is 120, the price level in South Africa is 140, and the nominal exchange rate is 7 South African rands per dollar, then the real exchange rate is
A) 6 South African goods per U.S. good.
B) 8.4 South African goods per U.S. good.
C) 9.8 South African goods per U.S. good.
D) 1.4 South African goods per U.S. good.
Question 2
The discount rate is the interest rate
A) paid on time deposits.
B) paid on funds banks borrow from other banks.
C) paid on funds that depository institutions borrow from the Federal Reserve.
D) that banks charge their best customers.
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