If the Nominal Exchange Rate Between the American Dollar and the Canadian

question 212

Multiple Choice

If the nominal exchange rate between the American dollar and the Canadian dollar is 0.89 Canadian dollars per American dollar,how many American dollars are required to buy a product that costs 2.5 Canadian dollars?

• A)$1.32
• B)$2.23
• C)$2.75
• D)$2.81

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Definitions:

Equilibrium Price

The market price at which the quantity of a good or service demanded equals the quantity supplied.

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price in a market.

Market

An economic system or environment where buyers and sellers interact to exchange goods and services for money or barter.

Merit Raise

A salary increase awarded to employees based on their job performance.