In the U.S. a television costs $400. In South Africa the same television costs 3000 rand (the currency of South Africa). The nominal exchange rate is 8 rand per dollar.
A. Find the real exchange rate. Show your work.
B. In terms of dollars where is the television cheapest?

Question

Riley Cabanero · Accepted Answer

Final Answer : The real exchange rate = 8 x 400/3000 = 3200/3000.The real exchange rate is greater than 1. The television is cheaper in South Africa.

In the U.S. a television costs $400. In South Africa the same television costs 3000 rand (the currency of South Africa). The nominal exchange rate is 8 rand per dollar.
A. Find the real exchange rate. Show your work.
B. In terms of dollars where is the television cheapest?

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Learning Objectives

Related questions

In the U.S. a television costs $400. In South Africa the same television costs 3000 rand (the currency of South Africa). The nominal exchange rate is 8 rand per dollar.A. Find the real exchange rate. Show your work.B. In terms of dollars where is the television cheapest?

Definitions

Learning Objectives

Learning Objectives

Related questions

In the U.S. a television costs $400. In South Africa the same television costs 3000 rand (the currency of South Africa). The nominal exchange rate is 8 rand per dollar.
A. Find the real exchange rate. Show your work.
B. In terms of dollars where is the television cheapest?