Questions: The exhibit below plots the nominal exchange rate between British pounds and U.S. dollars (pounds per dollar, in blue) and the real exchange rate between the two currencies (dollar prices in the United States divided by dollar prices in the United Kingdom, in red). Using the exhibit, in general, in the short run the nominal pound-dollar exchange rate moves in A. the opposite direction as the real exchange rate. B. a way that is not related to the real exchange rate. C. the same way as the real exchange rate.

The exhibit below plots the nominal exchange rate between British pounds and U.S. dollars (pounds per dollar, in blue) and the real exchange rate between the two currencies (dollar prices in the United States divided by dollar prices in the United Kingdom, in red). Using the exhibit, in general, in the short run the nominal pound-dollar exchange rate moves in A. the opposite direction as the real exchange rate. B. a way that is not related to the real exchange rate. C. the same way as the real exchange rate.
Transcript text: The exhibit below plots the nominal exchange rate between British pounds and U.S. dollars (pounds per dollar, in blue) and the real exchange rate between the two currencies (dollar prices in the United States divided by dollar prices in the United Kingdom, in red). Using the exhibit, in general, in the short run the nominal pound-dollar exchange rate moves in $\qquad$ A. the opposite direction as the real exchange rate. B. a way that is not related to the real exchange rate. C. the same way as the real exchange rate.
failed

Solution

failed
failed

Solution Steps

Step 1: Analyze the graph

The graph shows the nominal and real exchange rates between the British pound and the U.S. dollar from 1950 to 2010. Both are normalized to 100 in 1950. Visually, the two lines generally move together. When the nominal exchange rate increases, the real exchange rate tends to increase as well. Similarly, when the nominal exchange rate decreases, the real exchange rate tends to decrease.

Step 2: Determine the relationship

While there are periods where the two lines diverge, the overall trend shows that they move in the same direction.

Final Answer

\\(\boxed{C}\\)

Was this solution helpful?
failed
Unhelpful
failed
Helpful

Questions asked by other users

failedAnswered
4. 5. 6. y=-2x y=2x^2+4 y=-3x
failedAnswered
What are the vertices of the hyperbola defined by the equation x^2/4 - y^2/25 = 1 ? (0,0) (2,0) and (-2,0) (0,5) and (0,-5) (2,5) and (-2,-5) (4,25) and (-4,-25)
failedAnswered
If triangle ACB is congruent to triangle DCE, angle ABC=61 degrees, angle BCA=57 degrees, and angle CDE=2x degrees, x=[?]
failedAnswered
You should use LinkedIn to connect with other professionals including: business contacts colleagues peers from college All of the above
failedAnswered
What is the funnel approach in an introduction paragraph? A Starting with a specific thesis and then generalizing. B Starting more generally with background info and narrowing down to a specific, opinionated thesis. (C) Including detailed evidence in the introduction. D Restating the thesis multiple times