Assume That the Price Levels in Two Countries Are Constant

Multiple Choice

Assume that the price levels in two countries are constant. In this situation, we know that:

A) the real and nominal exchange rate must move together, changing by the same percentage.
B) neither the real nor the nominal exchange rate can change.
C) the nominal exchange rate can change, while the real exchange rate is constant.
D) the nominal exchange rate will fluctuate more widely than the real exchange rate.
E) the real exchange rate can change, while the nominal exchange rate is constant.