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 $55 dollars,then
A) the real exchange rate is greater than one and arbitrageurs could profit by buying oranges in the U.S.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 U.S.
C) the real exchange rate is less than one and arbitrageurs could profit by buying oranges in the U.S.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 U.S.
Correct Answer:
Verified
Correct Answer:
Verified
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