Asked by brent ashley on May 14, 2024
Verified
While vacationing in Turkey you see a rug you consider purchasing. The seller tells you the rug costs 1,200 Turkish lire.
A. If the exchange rate is .60 lira per dollar, how many dollars does the rug cost?
B. If the dollar depreciates against the lira, will it take more or fewer dollars to buy the rug? Explain.
Exchange Rate
The comparison value of one currency when exchanged for another.
Turkish Lire
The currency of Turkey, used as the standard monetary unit for transactions within the country.
Depreciates
The decrease in the value of an asset over time, often due to wear and tear or the introduction of newer models.
- Calculate and interpret exchange rates and their effect on international purchasing decisions.
- Analyze the impact of currency appreciation and depreciation on international trade and investment.
Verified Answer
AJ
ahmya jonesMay 17, 2024
Final Answer :
A. 1200 lire = $x times .60 lire per dollar, x = 1200/.60 = 2000
B. It would cost more dollars. If the dollar depreciated against the lira, each dollar would buy fewer lire.
B. It would cost more dollars. If the dollar depreciated against the lira, each dollar would buy fewer lire.
Learning Objectives
- Calculate and interpret exchange rates and their effect on international purchasing decisions.
- Analyze the impact of currency appreciation and depreciation on international trade and investment.
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