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If the Nominal Exchange Rate Falls 10 Percent, the Domestic

Question 81

Multiple Choice

If the nominal exchange rate falls 10 percent, the domestic price level rises 4 percent, and the foreign price level rises 6 percent, the real exchange rate will fall:


A) 0 percent.
B) 8 percent.
C) 10 percent.
D) 12 percent.

Correct Answer:

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