If the Nominal Exchange Rate Between the Pound and the Euro

question 5

Multiple Choice

If the nominal exchange rate between the pound and the euro changed from €1 = £2 to €1 = £3, then _____.

• A) the level of foreign currency reserves in the UK will fall
• B) French goods and UK goods will cost the same
• C) UK goods will become more expensive in France
• D) UK goods will become cheaper in France

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