If a CD costs $15 in the U.S. and the same CD costs 1,800 yen in...

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If a CD costs $15 in the U.S. and the same CD costs 1,800 yen in Japan, what would be the real exchange rate? Assume that the

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Answer 1

Answer #1

Answer

The correct answer is C.

Real exchange rate=
nominal exchange rate x

( domestic price/foreign price)

Real exchange rate = (100/1) x (15/1800)

= 0.83

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Answer 2

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