.2 points Question 6 A box of candy costs 28.80 Swiss francs in Switzerland and

Question

.2 points
Question 6

A box of candy costs 28.80 Swiss francs in Switzerland and $20 in the United States. Assuming that purchasing power parity (PPP) holds, what is the current exchange rate?
Answer 1 U.S. dollar equals 0.69 Swiss francs
1 U.S. dollar equals 0.85 Swiss francs
1 U.S. dollar equals 1.21 Swiss francs
1 U.S. dollar equals 1.29 Swiss francs
1 U.S. dollar equals 1.44 Swiss francs

.2 points
Question 7

If one Swiss franc can purchase $0.71 U.S. dollars, how many Swiss francs can one U.S. dollar buy?
Answer 0.50
0.71
1.00
1.41
2.81


.2 points
Question 8

Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.64 euros. What is the cross-rate of Swiss francs to euros?
Answer 0.43
0.86
1.41
1.64
2.27

Explanation / Answer

If PPP holds, the candy should cost the same in each country, so that 28.80 Swiss francs equals 20 U.S. dollars. This relationship implies that 1 U.S. dollar equals 1.44 Swiss francs.

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