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If the nominal exchange rate, E = UK/US$, does not change, and the UK's price level has increased relative to the US's price level by
If the nominal exchange rate, E = UK/US$, does not change, and the UK's price level has increased relative to the US's price level by 10%, then the real exchange rate (RER):
a. | RER increases and an increase in the competitiveness of the UK goods | |
b. | RER decreases and an increase in the competitiveness of the UK goods | |
c. | RER decreases and an increase in the competitiveness of the US goods | |
d. | All of the answers here are incorrect | |
e. | RER increases and an increase in the competitiveness of the US goods |
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