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.