The nominal exchange rate is 4 Saudi Arabian riyals,8 Moroccan dirham,60 Indian rupees,or .8 euros per U.S.dollar.A fast food breakfast costs $5 in the U.S. ,30 riyals in Saudi Arabia,40 Moroccan dirham in Morocco,250 Indian rupees in India,and 5 euros in France.According to these numbers,where is the real exchange rate between American and foreign goods the lowest?
A)Saudi Arabia
B)Morocco
C)India
D)Britain

Question

Quizplus · Accepted Answer

To find the real exchange rate, we need to calculate the cost of the fast food breakfast in each country in U.S. dollars (using the given nominal exchange rates):

Saudi Arabia: $7.50
Morocco: $4.80
India: $4.17
France: $6.25

Therefore, the real exchange rate is the lowest in Saudi Arabia, where the cost of the fast food breakfast is $7.50. This means that American goods are relatively more expensive in Saudi Arabia compared to the other countries.

The Nominal Exchange Rate Is 4 Saudi Arabian Riyals,8 Moroccan