For a given real exchange rate,a nominal appreciation of the domestic currency will result from
A)a decline in the terms of trade.
B)an increase in the price of the foreign good.
C)an increase in the price of the domestic good.
D)an increase in the domestic rate of inflation.

Question

Quizplus · Accepted Answer

An increase in the price of the foreign good makes the domestic currency relatively more valuable, leading to a nominal appreciation of the domestic currency.

For a Given Real Exchange Rate,a Nominal Appreciation of the Domestic