Suppose that a kilogram can of coffee costs about $6 in Canada.Suppose the exchange rate is 0.7 euro per dollar and that a kilogram can of coffee in Belgium costs about 2.1 euros.What is the real exchange rate?
A)2.45 cans of Belgian coffee per can of Canadian coffee
B)2 cans of Belgian coffee per can of Canadian coffee
C)3/4 cans of Belgian coffee per can of Canadian coffee
D)3/5 cans of Belgian coffee per can of Canadian coffee

Question

Quizplus · Accepted Answer

To find the real exchange rate, we need to compare the cost of one can of coffee in Canada to the cost of one can of coffee in Belgium converted to Canadian dollars. 
1 can of Belgian coffee = 2.1 euros = 2.1/0.7 dollars = $3
Therefore, the exchange rate is:
1 can of Belgian coffee/1 can of Canadian coffee = $3/$6 = 0.5
To convert this to the number of cans of Belgian coffee per can of Canadian coffee:
1/0.5 = 2 cans of Belgian coffee per can of Canadian coffee
Therefore, the best choice is B.

Suppose That a Kilogram Can of Coffee Costs About $6