Use the Following Information About the Spot Exchange Rates to Answer

question 37

Multiple Choice

Use the following information about the spot exchange rates to answer the questions 18 - 20.
Suppose that the spot exchange rates for British pound quoted in two locations are:

-Suppose that you have £1 million,how much arbitrage profit can you make?

• A) £-30,674.85
• B) £12,658.23
• C) £31,627.64
• D) £51,612.90

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Definitions:

Net Exports

The value of a country's total exports minus its total imports, representing the contribution of the trade balance to the overall GDP.

GDP

Gross Domestic Product, the total value of all goods and services produced over a specific time period within a country.

Government Purchases

Expenditures made by the government sector, including spending on goods and services by local, state, and federal governments.

Consumption

The purchase and use of goods and services by households.