Suppose That the Exchange Rate Is 50 Bangladesh Taka Per

question 186

Multiple Choice

Suppose that the exchange rate is 50 Bangladesh taka per Canadian dollar, and that a bushel of rice costs 200 taka in Bangladesh and $3 in Canada. Which statement is consistent with these facts?

• A) The real exchange rate is greater than one, and arbitrageurs could profit by buying rice in Canada and selling it in Bangladesh.
• B) The real exchange rate is greater than one, and arbitrageurs could profit by buying rice in Bangladesh and selling it in Canada.
• C) The real exchange rate is less than one, and arbitrageurs could profit by buying rice in Canada and selling it in Bangladesh.
• D) The real exchange rate is less than one, and arbitrageurs could profit by buying rice in Bangladesh and selling it in Canada.

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Definitions:

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Humulin N

An intermediate-acting insulin used to control blood sugar levels in people with diabetes, typically taking effect within a few hours of injection.