Question Details

Interpreting Exchange Rate Quotations



1. Interpreting Exchange Rate Quotations. Today you notice the following exchange rate quotations:
*$1 is equal to 3.00 Argentine pesos
*1 Argentine peso = 0.50 Canadian dollars

You need to purchase 100,000 Canadian dollars with U.S. dollars. How many U.S. dollars will you need for your purchase? 
2.	Inflation Effects on Exchange Rates. Assume that the U.S. inflation rate becomes high relative to Canadian inflation. Other things being equal, how should this affect the (a) U.S. demand for Canadian dollars, (b) supply of Canadian dollars for sale, and (c) equilibrium value of the Canadian dollar?



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