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A Nominal Depreciation of the Italian Lira Against All Currencies

Question 58

Multiple Choice

A nominal depreciation of the Italian lira against all currencies indicates that:


A) the lira price of foreign currency has decreased.
B) the Italian real exchange rate will not change if the price level in Italy falls.
C) the Italian real exchange rate will rise if the price level in Italy falls.
D) the number of units of foreign currency that one can obtain with one lira has increased.
E) the lira price of foreign currency has increased.

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