If the nominal exchange rate is 1.25 US dollars per Canadian dollar, and the price of a car is $20,000 in Canada and $24,000 in the US, what is the real exchange rate?

Economics:
10th Edition
ISBN:9781285859460
Author:BOYES, William
Publisher:BOYES, William
Chapter6: An Introduction To The Foreign Exchange Market And The Balance Of Payments
Section: Chapter Questions
Problem 13E
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If the nominal exchange rate is 1.25 US dollars per Canadian dollar, and the price of a car is $20,000 in Canada and $24,000 in the US, what is the real exchange rate?

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