If we ignore transportation costs and the price of a pair of Nike shoes in Detroit is 100 U.S. dollars what should be the price of the Nike shoes in Windsor, Canada (in Canadian dollars) if the nominal exchange rate is 1.36 Canadian dollars/1 U.S. dollar?
A) 74
B) 100
C) 136
D) 64

Question

Quizplus · Accepted Answer

According to the nominal exchange rate, 1 U.S. dollar is equal to 1.36 Canadian dollars. Therefore, if the price of Nike shoes is 100 U.S. dollars, then the price of the shoes in Canadian dollars would be 136 Canadian dollars (100 x 1.36).

If We Ignore Transportation Costs and the Price of a Pair