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The Relative Prices of U

Question 8

Multiple Choice

The relative prices of U.S. goods sold in Europe can change from day to
Day, even though domestic prices for the same goods in the United States are fixed in the short run, because


A) the prices of European goods sold at home are not fixed in the short run.
B) the nominal and not the real exchange rate can move in the very short run.
C) both the real and the nominal exchange rates can move in the very short run.
D) the theory that assumes that prices are fixed in the short run is fallacious.
E) none of the above.

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