A Tesla Model 3 car is sold in Indonesia for IDR 1.5 billion and US$ 35,000 in

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A Tesla Model 3 car is sold in Indonesia for IDR 1.5 billion and US$ 35,000 in the United States. If the nominal exchange rate of the Rupiah is currently at the level of IDR 14,040.15 per as$:

a. What is the real exchange rate of the Rupiah against the US$? Is there an arbitrage opportunity in this? (10 points)

b. Calculate the nominal exchange rate of the Rupiah against the US$ when purchasing power parity applies. (5 points)

Related Book For answer-question

International Economics

ISBN: 978-0073523170

15th edition

Authors: Thomas A. Pugel

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Posted Date: Apr 17, 2024 03:58 AM

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A Tesla Model 3 car is sold in Indonesia for IDR 1.5 billion and US$ 35,000 in

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a To determine the real exchange rate of the Rupiah against the US dollar we need to adjust the nominal exchange rate by considering the relative pric... View the full answer

International Economics

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