Suppose That the Exchange Rate Is 10 Moroccan Dirhams Per

question 24

Multiple Choice

Suppose that the exchange rate is 10 Moroccan dirhams per Canadian dollar.Also suppose that you can buy a crate of oranges for 300 dirhams in the Moroccan capital of Rabat and can buy a similar crate of oranges in Ottawa for $35.Which of the following is consistent with these facts?

• A)The real exchange rate is greater than one, and arbitrageurs could profit by buying oranges in Canada 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 Canada.
• C)The real exchange rate is less than one, and arbitrageurs could profit by buying oranges in Canada 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 Canada.

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Definitions:

Uranium-235

An isotope of uranium that is fissile, meaning it can sustain a nuclear chain reaction, used as fuel in nuclear reactors and weapons.

Conservation of Matter

A scientific law stating that matter cannot be created or destroyed in an isolated system, only transformed.

Pollution

The introduction of contaminants into the natural environment that causes adverse change, affecting air, water, and land quality.

Industrial Heat

Refers to the thermal energy generated and used in industrial processes, often involving the production and manufacturing sectors.