Consider an Identical Basket of Goods in Both the U

question 28

Multiple Choice

Consider an identical basket of goods in both the U.S.and Taiwan.For a given nominal exchange rate,in which case is it certain that the U.S.real exchange rate with Taiwan falls?

• A)the price of the basket of goods rises in the U.S.and Taiwan.
• B)the price of the basket of goods rises in the U.S.and falls in Taiwan.
• C)the price of the basket of goods falls in the U.S.and rises in Taiwan.
• D)the price of the basket of goods falls in both the U.S.and Taiwan.

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