Assume That the Nominal Exchange Rate Decreases by 6

question 69

Multiple Choice

Assume that the nominal exchange rate decreases by 6%. If both domestic and foreign prices do not change, we know that:

• A) foreign goods are now relatively more expensive.
• B) foreign goods are now relatively cheaper.
• C) domestic goods are now relatively more expensive.
• D) Both A and C.
• E) Both B and C.

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Definitions:

Trigeminal

Pertaining to the trigeminal nerve, which is the fifth cranial nerve responsible for sensation in the face and motor functions such as biting and chewing.

Cranial Nerve

One of twelve pairs of nerves that originate in the brain and primarily serve the head and neck (except the vagus nerve which extends to the abdomen).

Optic Nerve

A cranial nerve that transmits visual information from the retina to the brain.

Choroid

A layer of the eye between the retina and the sclera, rich in blood vessels, supplying nutrients to the eye's inner parts.