In the u. s. a candy bar costs $1. if the nominal exchange rate were 6 chinese yuan per dollar and the real exchange rate were 1.2, then, what would be the price of a candy bar in china? a. 5 yuan b. 7.2 yuan c. 3.6 yuan d. 6 yuan

Hence correct option is b i.e 7.2 yuan.

Explanation:

Given data;

candy bar cost is $1

Nominal exchange rate =  6 yuan equal to 1 dollar

Real exchange rate is = 1.2 dollar per 6 yuan

Therefore price for one candy at china will be  

The price of candy bar at china is = 7.2 yuan

Hence correct option is b i.e 7.2 yuan.

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