Suppose the Real Exchange Rate Is

question 333

Multiple Choice

Suppose the real exchange rate is .80 pounds of bananas in Guatemala per pound of bananas in the U.S. If a pound of bananas in the U.S. costs $.50, and the exchange rate is 8 Guatemalan Quetzals per dollar, what is the price of bananas in Guatemala?

• A)3.20 Quetzals per pound
• B)4.00 Quetzals per pound
• C)5.00 Quetzals per pound
• D)6.40 Quetzals per pound