If the Exchange Rate Is 8 Moroccan Dirhams Per U

question 13

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 $55 dollars,then

• A)the real exchange rate is greater than one and arbitrageurs could profit by buying oranges in the U.S.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 U.S.
• C)the real exchange rate is less than one and arbitrageurs could profit by buying oranges in the U.S.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 U.S.

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Definitions:

Financial Statement

An official document detailing the financial transactions and status of a company, person, or different entity.

Normal Balance

The side (debit or credit) of an account that is normally increased. For assets and expenses, it is the debit side; for liabilities, equity, and revenue, it is the credit side.

Account Nature

Refers to the intrinsic characteristics of an account that determine how transactions are recorded and classified, such as whether it is an asset, liability, revenue, or expense account.

Financial Statement

Reports that quantify the financial strength, performance, and liquidity of a company during a specific period.