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 parity 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 parity 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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