Which of the Following Events Will Cause the Largest Real

Multiple Choice

Which of the following events will cause the largest real depreciation for the domestic economy?

A) a 6% reduction in E and a 6% increase in the foreign price level (P*)
B) a 6% increase in the domestic price level (P) and a 6% reduction in P*
C) a 6% reduction in E and a 6% reduction in P*
D) a 3% increase in E
E) a 2% increase in E and a 2% increase in P