Assume That the Nominal Exchange Rate Decreases by 3

question 68

Multiple Choice

Assume that the nominal exchange rate decreases by 3%. If both domestic and foreign prices do not change, we know that:

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

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