If the Exchange Rate Is 60 Indian Rupees Per Dollar

question 51

Multiple Choice

If the exchange rate is 60 Indian rupees per dollar and a bushel of rice costs 200 rupees in India and $3 in the U.S. ,then the real exchange rate is

• A)greater than one and arbitrageurs could profit by buying rice in the U.S.and selling it in India.
• B)greater than one and arbitrageurs could profit by buying rice in India and selling it in the U.S..
• C)less than one and arbitrageurs could profit by buying rice in the U.S.and selling it in India.
• D)less than one and arbitrageurs could profit by buying rice in India and selling it in the U.S..

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