Multiple Choice
The nominal exchange rate is .80 euros per dollar and the real exchange rate is 4/3.Which of the following prices for a particular good are consistent with these exchange rates?
A) $4 in the U.S.and 3 euros in Italy.
B) $4 in the U.S.and 3.75 euros in Italy.
C) $5 in the U.S.and 3 euros in Italy.
D) $6 in the U.S.and 2.50 euros in Italy.
Correct Answer:
Verified
Correct Answer:
Verified
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