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Suppose the real exchange rate is 1/2 gallon of Canadian gasoline per gallon of U.S. gasoline, a gallon of U.S. gasoline costs $5.00 U.S., and a gallon of Canadian gas costs 8 Canadian dollars. What is the nominal exchange rate?1)1.25 Canadian dollars per U.S. dollar2)1.60 Canadian dollars per U.S. dollar3).80 Canadian dollars per U.S. dollar4)None of the above is correct.
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