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Question
A bushel of rice costs 500 yen in Japan and 100 pesos in Mexico. If someone could sell a bushel of rice in Japan for yen, take those yen and exchange them for pesos, then buy a bushel of rice in Mexico, the nominal exchange rate would be and the real exchange rate would be .a. 5 pesos per yen; 6 pesos per yen.
b. 1 peso per yen; 4 pesos per yen.
c. 1 peso per yen; 2 pesos per yen.
d. 5 pesos per yen; 1 peso per yen.
Answer
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