If the Representative Basket of European Goods and Services Costs

question 106

Multiple Choice

If the representative basket of European goods and services costs 40 euros, the representative U.S. basket costs $50, and the dollar/euro exchange rate is $0.90 per euro, then the price of the European basket in terms of U.S. basket is

• A) [(0.9 $/euro) (40 euro per a European basket)]/[(50 $/U.S. basket)].
• B) [(0.9 $/euro) (50 $/U.S. basket)]/[(40 euro per a European basket)].
• C) [(40 euro per a European basket)]/[(50 $/U.S. basket) (0.9 $/euro)].
• D) [(50 $/U.S. basket)].
• E) [(0.9 $/euro) (40 euro per a European basket) (50 $ U.S. basket)].

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