What Have We Assumed When We Conclude That a Real

Multiple Choice

What have we assumed when we conclude that a real depreciation of the currency improves the current account?

A) The volume effect outweighs the value effect.
B) The value effect outweighs the volume effect.
C) All else equal and the volume effect outweighs the value effect.
D) All else equal and the value effect outweighs the volume effect.
E) All else equal and the volume effect equals the value effect.