If goods in Canada cost the same number of dollars as German goods cost in euros, the real exchange rate would be computed as how many German goods per Canadian goods?
A) one
B) the price of the Canadian goods
C) the amount of German currency that can be bought with one unit of Canadian currency
D) the amount of Canadian currency that can be bought with one unit of German currency

Question

Quizplus · Accepted Answer

The real exchange rate is the rate at which one currency can be exchanged for another, taking into account the prices of goods and services in each country. If the goods in Canada cost the same as German goods in euros, then the exchange rate would be based on how much German currency can be bought with one unit of Canadian currency, since the prices of goods are already equivalent. Therefore, the answer is choice C.

If Goods in Canada Cost the Same Number of Dollars