Multiple Choice
A Starbucks Grande Latte costs $3.75 in the U.S. and 28 yuan in China. The nominal exchange rate is 6.75 yuan per dollar. The real exchange rate is
A) 1.106. If purchasing power partiy held the nominal exchange rate would be higher.
B) 1.106. If purchasing power parity held the nominal exchange rate would be lower.
C) .904. If purchasing power partiy held the nominal exchange rate would be higher.
D) .904. If purchasing power parity held the nominal exchange rate would be lower.
Correct Answer:
Verified
Correct Answer:
Verified
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