Suppose one U.S. dollar can purchase a half pound of strawberries in the United States. After converting dollar to pesos, one U.S. dollar can now purchase a full pound of strawberries in Mexico. These values represent:
a) a real exchange rate.
b) a nominal exchange rate.
c) a purchasing power parity rate.
d) a transaction rate.
Ans: a) a real exchange rate.
Economics
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