Assume that the price of a car in the United States is equal to $20,000 and the same car in Japan is priced at 2,400,000 yen. If 1 car in the United States is equal to only ½ car in Japan, then the nominal exchange rate between the two countries, based solely on this one product, is

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To compare the prices of the car in the two countries, we need to convert them to the same currency. Let's convert the Japanese price to US dollars using the exchange rate:

2,400,000 yen ÷ 2 (since 1 car in the US = ½ car in Japan) = 1,200,000 yen
1,200,000 yen ÷ 100 yen/USD = $12,000

So the Japanese price in dollars is $12,000. Now we can compare the prices:

US price = $20,000
Japanese price = $12,000

To find the nominal exchange rate, we need to find how many yen you can get for $1:

$1 ÷ 12,000 yen = 0.0000833...

To make this easier to read, we can multiply by 100,000:

$1 = 83.333... yen

Rounded to the nearest yen, the nominal exchange rate is:

US$1 = ¥240

Therefore, the answer is B.

Assume That the Price of a Car in the United