The Nominal Exchange Rate Is 3 Malaysian Ringgits Per Dollar

question 124

Essay

The nominal exchange rate is 3 Malaysian ringgits per dollar. The real exchange rate is 8/5. If a Big Mac costs 7.5 ringgits in Malaysia, how much does a Big Mac cost in the U.S.? Show your work.

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Definitions:

Public Good

A product or service that is provided without profit to all members of a society, either freely or by the government, and which is non-excludable and non-rivalrous.

Marginal Benefit

The additional satisfaction or utility a consumer receives from consuming an additional unit of a good or service.

Marginal Cost

The financial outlay for making one more unit of a product or service.

Pollution Abatement

Measures and activities undertaken to reduce, control, or eliminate pollution from various sources in order to protect the environment.