Other things the same, if the U. S. price level falls, then a. U. S. residents want to buy more foreign bonds. The real exchange rate rises. b. U. S. residents want to buy more foreign bonds. The real exchange rate falls.

Other things the same, if the U.S. price level falls, then b. US residents want to buy more foreign bonds. The real exchange rate falls.

Explanation:

The price level is the measure of overall prices for some set of goods and services produced in the economy. The price level refers the price of goods, services and assets in the country.

The price level is the major factor in determining the purchasing power of the consumer. Economist always keeps tracking the price level.

A foreign bond means purchasing a bond from the domestic market of the foreign country with the currency of their country.

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