When the relative price of a good in Germany versus the United States is 3, if the nominal exchange rate is E_$/€= 1.5 and the U.S. price is $10, what is the German price? A) €4 B) €15 C) €20 D) €45

Question

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Given, the relative price of a good in Germany versus the United States as 3 and the U.S. price as $10. Let the German price be x, then Relative price = (German price) / (U.S. price) 3 = x / $10 x = $30 Also, given the exchange rate as E_$/€= 1.5, which means 1 euro = $1.5 Therefore, German price = $30 = 30/1.5 = €20 Hence, the best choice is C.

When the Relative Price of a Good in Germany Versus