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Imagine that, in 2015, the bilateral real exchange rate between the domestic economy and the foreign economy has decreased (3 real depreciation). At the same
Imagine that, in 2015, the bilateral real exchange rate between the domestic economy and the foreign economy has decreased (3 real depreciation). At the same time, the nominal exchange rate has increased (a nominal appreciation). What does this imply? Select one: a. It implies that in 2015 the inflation rate has been lower in the foreign economy than in the domestic economy. b. It implies that the uncovered interest parity condition has not been satisfied during 2015. c. It implies that the uncovered interest parity condition has been satisfied during 2015. d. It implies that in 2015 the inflation rate has been lower in the domestic economy than in the foreign economy
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