Asked by JadedFace Beauty on Jul 27, 2024
Verified
If a U.S. importer can purchase 10,000 British pounds for $20,000, the rate of exchange is
A) $1 = 2 British pounds in the United States.
B) $2 = 1 British pound in the United States.
C) $1 = 2 British pounds in Great Britain.
D) $0.50 = 1 British pound in Great Britain.
Exchange Rate
A measure representing how much one currency can be exchanged for another, impacting international trade and finance.
British Pounds
The currency of the United Kingdom, used as a medium of exchange within the country and its territories.
- Comprehend the fundamental principles of exchange rates and the process by which they are established in global markets.
- Identify the impact of changes in currency values on global trade and financial dealings.
Verified Answer
AR
Angelina RaindanceJul 31, 2024
Final Answer :
B
Explanation :
If the U.S. importer can purchase 10,000 British pounds for $20,000, then the exchange rate is 10,000/20,000 = 0.5 British pounds per U.S. dollar. In other words, it takes $2 to purchase one British pound. Therefore, the correct answer is B, which states that $2 = 1 British pound in the United States.
Learning Objectives
- Comprehend the fundamental principles of exchange rates and the process by which they are established in global markets.
- Identify the impact of changes in currency values on global trade and financial dealings.