Assume That the Exchange Rate Between the Dollar and the Euro

question 11

Multiple Choice

Assume that the exchange rate between the dollar and the euro is €1 = $1. Suppose the exchange rate changes to €1.25 = $1. What is the price in dollars of a €200 pair of Italian shoes before and after the exchange rate change?

• A)$200 before; $160 after
• B)$200 before; $250 after
• C)$160 before; $125 after
• D)$125 before; $160 after

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Definitions:

Income Equalization

Policies or practices aimed at reducing the disparity in income among individuals in an economy.

Utilitarianism

The political philosophy according to which the government should choose policies to maximize the total utility of everyone in society.

Deccan Sultanates

A group of five dynasties that ruled over the Deccan Plateau in south-central India from the 14th to the 17th century, known for their contributions to Indian art and architecture.

Vijayanagar Empire

A prominent South Indian empire known for its wealth, strength, and patronage of the arts and architecture, flourishing between the 14th and 17th centuries.