If the Exchange Rate Is 8 Moroccan Dirhams Per U

question 396

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.

---

Definitions:

Decision Trees

A graphical representation used for making decisions, showing different courses of action and the potential outcomes or risks associated with each.

Decision Tables

A tool used in both computer programming and business decision-making to represent and analyze complex decision rules and logic by organizing actions and conditions in a tabular form.

Expected Monetary Value

A decision-making tool used in risk management to calculate the average outcome when the future holds scenarios with different probabilities.