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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

Respuesta :

Answer:

Real exchange rate will be 0.9040 yuan

Explanation:

We have given nominal exchange rate = 6.75 yuan per dollar

Domestic price = $3.75

And foreign price = $28

We have to fond the real exchange rate

Real exchange rate is given by

Real exchange rate [tex]=nominal\ exchange\ rate\times \frac{domestic\ price}{foreign\ price}=6.75\times \frac{3.75}{28}=0.9040[/tex] yuan

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