If purchasing-power parity holds, a bushel of rice costs $10 in the u. s., and the nominal exchange rate is 25 thai baht per dollar, what is the price of rice in thailand?

The price of rice in the Thailand is likely to be 250 Thai baht per bushel.

Explanation:

According to the purchasing power parity theory, the exchange rate between two countries is based on a basket of goods. The nominal exchange rate is the ratio of prices of goods in two different countries.

The price of rice in the US is $10 per bushel.

The nominal exchange rate between US dollars and Thai baht is 25 Thai baht/$.

The nominal exchange rate =

25 Thai baht/$=

Price of rice in Thailand =

Price of rice in Thailand = $250

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