Find the real exchange rate for the following case: Assume that the representative basket of European goods costs 150 euros and the representative U.S. basket costs $200,
and the dollar/euro exchange rate is $1.20 per euro, then the price of the European basket in terms of U.S. basket is:
[(1.20 $/euro) (150 euro per a European basket)]/[(200 $/U.S. basket)] = 0.9 U.S. baskets/European basket.
Economics
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