Suppose that a bushel of wheat costs $3 in the U.S. and 20 pesos in Mexico. If the nominal exchange rate is 10 pesos per dollar, the real exchange rate is:
A) 3/2 bushels of Mexican wheat per bushel of U.S. wheat.
B) 2/3 bushels of Mexican wheat per bushel of U.S. wheat.
C) $2 per bushel of Mexican wheat.
D) $1.50 per bushel of Mexican wheat.
Correct Answer:
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