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May 24, 2015

Homework Help: eco

Posted by Karen on Wednesday, November 19, 2008 at 1:00am.

Assume that American rice sells for $100 per bushel, Japanese rice sells for 16,000 yen per bushel, and the nominal exchange rate is 80 yen per dollar. Suppose that rice is the only commodity in the world. What would happen to the real exchange rate between the United States and Japan?

Is it equal to 1? If not, can anyone please correct me and explain it to me?


THANKS A LOT!!!

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