To determine the impact on the home country's effective multilateral exchange rate, we need to consider the weights of the trade volume with each country and the respective exchange rate changes.
Given that 75% of the trade volume is with country A and its exchange rate depreciates by 16%, while 25% of the trade volume is with country B and its exchange rate appreciates by 8%, we can calculate the effective multilateral exchange rate change as follows:
Effective multilateral exchange rate change = (Weighted exchange rate change with A) + (Weighted exchange rate change with B)
= (0.75 * -16%) + (0.25 * 8%)
= -12% + 2%
= -10%
Therefore, the home country's effective multilateral exchange rate depreciates by 10% (option c).