If 5 Swiss francs trade for $1, the Canadian price level equals $1 for a good, and the Swiss price level equals 2 francs for the same good, then the real exchange rate between Swiss goods and Canadian goods is _____ Swiss good(s) per Canadian good.

Question

Quizplus · Accepted Answer

The real exchange rate is calculated as (Nominal Exchange Rate * Domestic Price) / Foreign Price. Here, it is (5 francs/$1 * $1) / 2 francs = 2.5 Swiss goods per Canadian good.

If 5 Swiss Francs Trade for $1, the Canadian Price