The ability to profit by purchasing wheat in the U.S.and selling it in China implies that the
A)nominal exchange rate is less than 1.
B)nominal exchange rate is greater than 1.
C)real exchange rate is less than 1.
D)real exchange rate is greater than 1.

Question

Quizplus · Accepted Answer

The ability to profit by purchasing wheat in the U.S. and selling it in China implies that the real exchange rate is less than 1, indicating that U.S. wheat is cheaper in China, allowing for arbitrage opportunities.

The Ability to Profit by Purchasing Wheat in the U