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3. Assume that the nominal exchange rate increases by 2%. If prices (both domestic and foreign) do not change, we know that: A) domestic goods
3. Assume that the nominal exchange rate increases by 2%. If prices (both domestic and foreign) do not change, we know that:
A) domestic goods are now relatively cheaper.
B) domestic goods are now relatively more expensive.
C) foreign goods are now relatively cheaper. D) both B and C
E) none of the above
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