Suppose the Real Exchange Rate Is 1 Litre of Canadian

Multiple Choice

Suppose the real exchange rate is 1 litre of Canadian gasoline per 2 litres of U.S. gasoline, 1 litre of U.S. gasoline costs $0.50 U.S., and a litre of Canadian gas costs $1.20 Canadian. What is the nominal exchange rate?

A) 0.21 U.S. dollars per Canadian dollar
B) 0.42 U.S. dollars per Canadian dollar
C) 0.83 U.S. dollars per Canadian dollar
D) 1.20 U.S. dollars per Canadian dollar