Suppose That a Bushel of Wheat Costs $5 in Canada

question 43

Multiple Choice

Suppose that a bushel of wheat costs $5 in Canada and costs 50 pesos in Mexico.If the nominal exchange rate is 30 pesos per dollar,what is the real exchange rate?

• A) 1 / 3
• B) 1
• C) 3
• D) 10

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Definitions:

Direct Labor

The labor costs associated with employees who directly contribute to the production of goods or the provision of services.

Straight-line Depreciation

A method of allocating an asset’s cost evenly across its useful life.

Break-even Point

The volume of sales at which total revenues equal total costs, resulting in zero profit or loss.

Variable Cost

Costs that change in proportion to the level of goods or services a business produces.