19. The price of foreign goods in terms of domestic goods is called 2 the real exchange rate b. the balance of trade the trade-weighted exchange rate d purchasing parity 20. An increase in the real exchange rate will a raise national income b. lower national income C. make a country less competitive in international trade d. raise the cost of foreign goods 21. A slowdown in U.S. economic growth will boost the value of the dollar because inflation fears will be calmed b. boost the value of the dollar because the Federal Reserve will expand the money supply c. lower the value of the dollar because the U.S. will be a less attractive place to invest in d. lower the value of the dollar because interest rates will rise 22. The willingness of people to hold money increases with the interest rate b. rises with price stability rises with national income d. bandc only 23. Sound economic policies will raise the value of a nation's currency by boosting the economy b. lower the value of a nation's currency by increasing the precautionary demand for money lower the value of a nation's currency by leading to lower interest rates both b and c 24. Large government budget deficits will raise the value of a nation's currency by raising domestic interest rates raise the value of a nation's currency by stimulating the domestic economy lower the value of a nation's currency by leading to higher inflation d. lower the value of a nation's currency by leading to added political risk historical experience shows no correlation between government budget deficits and the value of the nation's currency