Question

if the real exchange rate for coal is 1.5 the price of coal in the united states is 50 per ton and the price of coal in britian is 20 british pounds per ton what is the nominal exchange rate

Answer 1

Answer:

c. 3/5

Explanation:

Note: Options to this question is attached as picture below

Real exchange rate is given as: Nominal Exchange rate * Price of domestic good/Price of foreign good

1.5 = Nominal Exchange rate * 50/20

Nominal Exchange rate = 1.5 * 20/50

Nominal Exchange rate = 30/50

Nominal Exchange rate = 3/5