Which of the following is likely to be true of the nominal and the real exchange rates in the short run and in the long run, if prices in two countries do not respond to exchange rate changes?
A) The real exchange rate and the nominal exchange rate between the currencies move proportionally in both the short run and the long run.
B) The real exchange rate and the nominal exchange rate between the currencies move proportionally in the short run but not in the long run.
C) The real exchange rate and the nominal exchange rate between the currencies remain constant.
D) The real exchange rate and the nominal exchange rate between the currencies move proportionally in the long run but not in the short run.
B
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