Multiple Choice
If the exchange rate is 8 Moroccan dirhams per U.S. dollars, a crate of oranges costs 400 dirhams in the Moroccan capital of Rabat, and a similar crate of oranges in Miami sells for $45 dollars, then
A) the real exchange rate is greater than one and arbitrageurs could profit by buying oranges in the United States and selling them in Morocco.
B) the real exchange rate is greater than one and arbitrageurs could profit by buying oranges in Morocco and selling them in the United States.
C) the real exchange rate is less than one and arbitrageurs could profit by buying oranges in the United States and selling them in Morocco.
D) the real exchange rate is less than one and arbitrageurs could profit by buying oranges in Morocco and selling them in the United States.
Correct Answer:
Verified
Correct Answer:
Verified
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