If it took as many dollars to buy goods in Canada as it did to buy enough currency to buy the same goods in Kenya,the real exchange rate would be computed as how many Kenyan goods per Canadian goods?
A) one
B) the number of dollars needed to buy Canadian goods divided by the number of shillings needed to buy Kenyan goods
C) the number of shillings needed to buy Kenyan goods divided by the number of dollars needed to buy Canadian goods
D) a number equal to the nominal exchange rate

Question

Quizplus · Accepted Answer

If the cost in dollars is the same for goods in both countries, the real exchange rate is one, meaning one Canadian good equals one Kenyan good in terms of purchasing power.

If It Took as Many Dollars to Buy Goods in Canada