If Purchasing-Power Parity Holds,the Price Level in the U

question 20

Multiple Choice

If purchasing-power parity holds,the price level in the U.S.is 250,and the price level in Japan is 260,which of the following is true?

• A)the real exchange rate is 250/260
• B)the real exchange rate is 260/250
• C)the nominal exchange rate is 250/260
• D)the nominal exchange rate is 260/250

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