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5) When the relative supply of US goods increases, A) both the price level and the real exchange rate rise implying nominal dollar depreciation.

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5) When the relative supply of US goods increases, A) both the price level and the real exchange rate rise implying nominal dollar depreciation. B) both the price level and the real exchange rate fall (assuming Balassa-Samuelson effect) implying nominal dollar appreciation. C) the price level falls but the real exchange rate rises (assuming Balassa-Samuelson effect) resulting in an indeterminate effect on the nominal exchange rate. D) the price level rises but the real exchange rate falls resulting in an indeterminate effect on the nominal exchange rate. E) the price level is not affected and only the real exchange rate is.

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