Question
Suppose iPhone is the only good produced and is identical across the world. An iPhone costs 5 CAD in Canada, and 4 USD in America.
Suppose iPhone is the only good produced and is identical across the world. An iPhone costs 5 CAD in Canada, and 4 USD in America. The nominal exchange rate is 1USD = 1.3 CAD. What is the real exchange rate between US and Canada? According to the Law of One Price, is the Canadian dollar over-valued or under-valued?
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Principles Of Finance With Excel
Authors: Simon Benninga
2nd Edition
0199755477, 9780199755479
