1. Assume that the exchange rate between the U.S. dollar and the Indian rupee is

Question

1. Assume that the exchange rate between the U.S. dollar and the Indian rupee is 43
rupees per dollar. In Jaiphur you look at a nifty Oriental rug. The dealer (since he
likes you-in fact, he likes all Americans) offers you this treasure at only 75,000
rupees. In dollars, you are about to spend: (Points : 3)        about $430
       about $750
       about $1750
       about $17,500 Question 2.2. A logical starting point for understanding how exchange rates are determined is a simple idea called ___________, which states that if two countries produce an identical good, the price of the good should be the same throughout the world no matter which country produces it. (Points : 3)        Gresham's law
       the law of one price
       purchasing power parity
       arbitrage 1. Assume that the exchange rate between the U.S. dollar and the Indian rupee is 43
rupees per dollar. In Jaiphur you look at a nifty Oriental rug. The dealer (since he
likes you-in fact, he likes all Americans) offers you this treasure at only 75,000
rupees. In dollars, you are about to spend: (Points : 3)        about $430
       about $750
       about $1750
       about $17,500

Explanation / Answer

43 rupee = $1

So 75000 = $ X

X = 75000/43

    = 1744

Option c should be the correct option (about 1750)

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.