If the Nominal Exchange Rate Falls 10 Percent, the Domestic

question 81

Multiple Choice

If the nominal exchange rate falls 10 percent, the domestic price level rises 4 percent, and the foreign price level rises 6 percent, the real exchange rate will fall:

• A) 0 percent.
• B) 8 percent.
• C) 10 percent.
• D) 12 percent.

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