Suppose the Exchange Rate Is Such That 1 U

question 137

Multiple Choice

Suppose the exchange rate is such that 1 U.S.dollar equals 1 euro in New York and 0.9 euros in Paris.An arbitrageur would sell euros:

• A)in New York and buy U.S.dollars in Paris.
• B)in both Paris and New York at different prices.
• C)in New York while buying them in Paris.
• D)in Paris while buying them in New York.
• E)at the same price in both cities.

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Definitions:

Frequent Buyer Program

A customer loyalty scheme where consumers are rewarded for making repeated purchases with a particular company.

Peak-load Pricing

A pricing strategy used to regulate demand by charging higher prices during peak usage times and lower prices during off-peak times.

Intertemporal Price Discrimination

A pricing strategy where a seller changes prices over time for the same product or service to different consumers, aiming to maximize profits by targeting price sensitivity at different time periods.

Cellular Phone

A wireless handheld device that allows users to make and receive calls and access data services over a cellular network.