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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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