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
The real exchange rate = 8/5 = U.S. price x 3 ringgits per dollar/7.5 ringgits.
8 x 7.5 ringgits/5 x 3 ringgits per dollar = U.S. price
$4 = U.S. price
Economics
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