Three-wheel cars made in North Edsel are sold for 5000 pounds.​ Four-wheel cars made in South Edsel are sold for​ 10,000 marks. The real exc

Question

Three-wheel cars made in North Edsel are sold for 5000 pounds.​ Four-wheel cars made in South Edsel are sold for​ 10,000 marks. The real exchange rate between North and South Edsel is four​ three-wheel cars for three​ four-wheel cars. The nominal exchange rate between the two countries is _______

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Ariana 2 weeks 2021-10-12T08:38:35+00:00 1 Answer 0

Answers ( )

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    2021-10-12T08:40:24+00:00

    Answer:

    1.50 marks per pound

    Step-by-step explanation:

    Data provided in the question:

    Selling price of three-wheel cars made in North Edsel = 5000 pounds

    Selling price of four-wheel cars made in south Edsel = 10,000 marks

    Real exchange rate between North and South Edsel

    = four​ three-wheel cars for three​ four-wheel cars

    i.e

    ⇒ 4 × 5000 pounds  = 3 × 10,000 marks

    or

    1 pounds = [ ( 3 × 10,000 ) ÷ ( 4 × 5,000) ]

    or

    1 pound = 30,000 ÷ 20,000

    or

    1 pound = 1.50 marks

    Hence,

    The nominal exchange rate = 1.50 marks per pound

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