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If countries A and B are the only two countries in the world, then if the currency of country A appreciates, the currency of country B... O a. May appreciate or depreciate, depending on the elasticity of demand for the exports of country A. O b. May appreciate or depreciate, depending on the volume of trade between the two countries. O c. Must appreciate. O d. Can appreciate relative to other countries. O e. Must depreciate.

If countries A and B are the only two countries in the world, then if the currency of country A appreciates, the currency of country B... O a. May appreciate or depreciate, depending on the elasticity of demand for the exports of country A. O b. May appreciate or depreciate, depending on the volume of trade between the two countries. O c. Must appreciate. O d. Can appreciate relative to other countries. O e. Must depreciate.

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: A Macroeconomic Theory Of The Open Economy
Section: Chapter Questions
Problem 4CQQ
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If countries A and B are the only two countries in the world, then if the currency of country A appreciates, the currency of country B... O a. May appreciate or depreciate, depending on the elasticity of demand for the exports of country A. O b. May appreciate or depreciate, depending on the volume of trade between the two countries. O c. Must appreciate. O d. Can appreciate relative to other countries. O e. Must depreciate.
Transcribed Image Text:If countries A and B are the only two countries in the world, then if the currency of country A appreciates, the currency of country B... O a. May appreciate or depreciate, depending on the elasticity of demand for the exports of country A. O b. May appreciate or depreciate, depending on the volume of trade between the two countries. O c. Must appreciate. O d. Can appreciate relative to other countries. O e. Must depreciate.
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