Suppose the Real Exchange Rate Is 1/2 Gallon of Canadian

Multiple Choice

Suppose the real exchange rate is 1/2 gallon of Canadian gasoline per gallon of U.S. gasoline, a gallon of U.S. gasoline costs $1.50 U.S., and a gallon of Canadian gas costs $3.90 Canadian. What is the nominal exchange rate?

A) 0.385 Canadian dollars per U.S. dollar
B) 0.65 Canadian dollars per U.S. dollar
C) 1.10 Canadian dollars per U.S. dollar
D) 1.30 Canadian dollars per U.S. dollar