Appreciation of the real exchange rate:
A. makes U.S. exports less expensive to foreigners.
B. makes U.S. exports more expensive to foreigners.
C. benefits all U.S. producers.
D. means a basket of U.S. goods would exchange for fewer foreign goods.
Answer: B
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(a) increase potential output (b) increase unemployment (c) have no impact on real output (d) promote the production of consumer goods over capital goods (e) result in deflation
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