Multiple Choice
Assuming no change in the nominal exchange rate, how will a decrease in the price level in Canada relative to France affect the real exchange rate between the two countries? (Assume Canada is the "domestic" country.)
A) The real exchange rate will rise.
B) The real exchange rate will fall.
C) The real exchange rate will be unaffected.
D) The impact on the real exchange rate cannot be predicted.
Correct Answer:
Verified
Correct Answer:
Verified
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