In the U.S. a box of tea costs $5 . The same box of tea in Uganda costs 10,000 schillings (the currency of Uganda). If the real exchange rate is 5/4, what is the nominal exchange rate? Show your work
The real exchange rate 5/4 = $5 x the nominal exchange rate/10,000 schillings.
5 x 10,0000 schillings/4 x $5 = the nominal exchange rate
the nominal exchange rate = 2500 schillings per dollar
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