Other Things the Same,an Increase in the Foreign Price Level

Multiple Choice

Other things the same,an increase in the foreign price level

A) reduces the real exchange rate.This reduction could be offset by a decrease in the domestic price level.
B) reduces the real exchange rate.This reduction could be offset by an increase in the domestic price level.
C) increases the real exchange rate.This increase could be offset by a decrease in the domestic price level.
D) increases the real exchange rate.This increase could be offset by an increase in the domestic price level.