Suppose a Cup of Coffee Is €1

question 6

Multiple Choice

Suppose a cup of coffee is €1.50 in Germany and R0.50 in SA.If purchasing power parity holds, what is the nominal exchange rate between euros and rands?

• A)€0.33 per rand.
• B)€1.50 per rand.
• C)€0.75 per rand.
• D)€3 per rand.

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