If all countries produce the same good (or the same set of goods) and goods are freely traded among countries, so that the real exchange rate equals one, then the relationship between domestic and foreign prices and the nominal exchange rate is
a. P = P(For)/e(nom).
b. P = P(For).
c. e(nom) = P*P(For).
d. P = e(nom)/P(For).
Answer: A
FIN 201
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