A dozen eggs cost $2 in the U.S. and 12 pesos in Argentina. If the real exchange rate is 5/6, what is the nominal exchange rate? Show your work
The real exchange rate = 5/6 = the nominal exchange rate x $2/12 pesos.
So, the nominal exchange rate = 5x12 pesos/6x$2 = 60 pesos/$12 = 5 pesos per dollar.
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