Question

If purchasing power parity holds, a bushel of rice costs $10 in the US, and the nominal exchange rate is 2 Thai bhat per dollar, what is the price of rice in Thailand

Answer 1

20 bhat

Step-by-step explanation:

Calculation for the price of rice in Thailand

Using this formula

Price=Costs×Nominal exchange rate

Let plug in the formula

Price =$10×2 Thai bhat per dollar

Price =20 bhat

Therefore the price of rice in Thailand will be

20 bhat