Suppose that the yen falls from ¥800 to ¥1,200 to the dollar and the price level in Japan increases by 50% but there is no change in the price level in the United States. Which statement is TRUE?
A) The nominal exchange rate of the yen has appreciated against the dollar.
B) The nominal exchange rate of the dollar has depreciated against the yen.
C) The real exchange rate has decreased.
D) The real exchange rate has remained unchanged.
Correct Answer:
Verified
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