1. The Peso/$ rate is 8.25 and inflation rates in America and Mexico are 3% and 7% respectively. If the final Peso/$ rate goes to 8.45 which statement is true.

a. The $ went up in nominal terms and the $ went up in real terms.

b. The $ went up in nominal terms and the Peso went up in real terms.

c. The Peso went up in nominal terms and the $ went up in real terms.

d. The Peso went up in nominal terms and the Peso went up in real terms.

2. Who is better off if the US dollar increases in real value?

a. a US exporter

b. a US (non-importing)competitor of a US importer

c. a foreign importer

d. a foreign(non-exporting) competitor to a foreign exporter

e. none of the above

3. True/False You are a Japanese importer buying from an American firm, and the payment is made in dollars. You could hedge this transaction by selling Yen forward.