Multiple Choice
If the exchange rate is 70 Bangladesh taka per dollar and a bushel of rice costs 200 taka in Bangladesh and $3 in the United States, then the real exchange rate is
A) greater than one and arbitrageurs could profit by buying rice in the United States and selling it in Bangladesh.
B) greater than one and arbitrageurs could profit by buying rice in Bangladesh and selling it in the United States.
C) less than one and arbitrageurs could profit by buying rice in the United States and selling it in Bangladesh.
D) less than one and arbitrageurs could profit by buying rice in Bangladesh and selling it in the United States.
Correct Answer:
Verified
Correct Answer:
Verified
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