Multiple Choice
If the current exchange rate is 1€/1$U.S.and bagels cost 1€ in France and 1$ in the U.S.and the current exchange rate for bagels is 0.74 European bagel/1U.S.bagel and if the bagels are identical:
A) The nominal exchange rate is 0.74€/$
B) This is a good example of the Theory of Purchasing Power of Parity working as it should
C) The real exchange rate equals the nominal exchange rate
D) The real exchange rate is 0.74 French bagel/1U.S.bagel
Correct Answer:
Verified
Correct Answer:
Verified
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