A Starbucks Grande Latte Costs $3

question 378

Multiple Choice

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

• A)1.106. If purchasing power partiy held the nominal exchange rate would be higher.
• B)1.106. If purchasing power parity held the nominal exchange rate would be lower.
• C).904. If purchasing power partiy held the nominal exchange rate would be higher.
• D).904. If purchasing power parity held the nominal exchange rate would be lower.

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Definitions:

November and December Sales

Refers to the revenue generated from the sale of goods or services during the months of November and December, often a significant period for retailers due to holiday shopping.

Department Store

A large retail store offering a wide range of products and brands under one roof, organized into departments for shopper convenience.

Toy Manufacturer

A business involved in the design, production, and marketing of toys for children and sometimes adults.

Trucking Company

A business entity that specializes in transporting goods across distances using trucks.