You\'re traveling in Ireland and are thinking about buying a new digital camera.
ID: 1121218 • Letter: Y
Question
You're traveling in Ireland and are thinking about buying a new digital camera. You've decided you'd be willing to pay $125 for a new camera, but cameras in Ireland are all priced in euros. If the camera you're looking at costs 115 euros, under which of the following exchange rates would you be willing to purchase the camera? (Assume no taxes or duties are associated with the purchase.) A) 0.56 euros per dollar B) 0.89 euros per dollar O c) 0.92 euros per dollar O D) You would purchase the new camera at any of the above exchange rates. Save Question 46 (1 point) If the dollar appreciates against the Mexican peso, O A) The value of Mexican imports to the United States does not change. O B) U.S. exports to Mexico become more expensive. C) Mexican imports to the U.S. become more expensive. O D) U.S. exports to Mexico become less expensive. Save 35 40 Question 47 (1 point) 45 The gold standard is an example of O A) a flexible exchange rate system. O B) a floating exchange rate system. O C) a fixed exchange rate system O D) the Bretton Woods System O E) a managed float exchange rate system. 50 SaveExplanation / Answer
Question 45
Cost of Camera in Euros = 115 Euros
Maximum amount we are willing to pay = $125
Converting $125 into euros at 0.56 euros per dollar -
Number of euros = 0.56 * 125 = 70 Euros
Converting $125 into euros at 0.89 euros per dollar -
Number of euros = 0.89 * 125 = 111.25 Euros
Converting $125 into euros at 0.92 euros per dollar -
Number of euros = 0.92 * 125 = 115 Euros
It can be seen that if exchange rate is 0.92 euros per dollar then in that case spending $125 will get us the camera costing 115 euros.
So, under exchange rate of 0.92 euros per dollar, we would be willing to purchase the camera.
The correct answer is the option (C).
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