While on a study abroad program you see a McDonald's in Paris. A combo meal costs 8 euros. The same meal costs $6 in the U.S. and the exchange rate is .75 euros per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the combo meal cheaper?
The real exchange rate = .75 x 6/8 = .5625
The real exchange rate is less than 1 . The meal is cheaper in the U.S.
You might also like to view...
The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient?
A) 0 chocolate bars and 100 cans of cola B) 20 chocolate bars and 80 cans of cola C) 32 chocolate bars and 40 cans of cola D) 38 chocolate bars and 0 cans of cola
Think in terms of the consumer. A shortage of a good exists when
a. demand is greater than supply b. the quantity supplied is greater than the quantity demanded c. the quantity demanded is greater than the quantity supplied d. supply is greater than demand e. the price is at its equilibrium level, but the quantities bought and sold are not equal
The International Monetary Fund's primary role under the Bretton Woods System was to be:
A. the issuer of gold. B. a short-term lender for countries with an excess of imports over exports. C. the clearinghouse for international transactions. D. the arbiter of trade disputes.
Economics is a:
A) social science that deals with making choices among alternatives. B) natural science that concerns itself with allocating relatively scarce resources among alternative ends. C) science that has no theories or models based on the scientific method. D) humanities course that mainly concerns itself with limited wants versus unlimited resources.