4.Paul made holidays in Istanbul in February 2021. The nominal exchange rate then was 1 GBP = 10 TRY, that is he could buy ten Turkish Lira for one Pound Sterling. In total he spent 500 GBP on the hotel, restaurants, etc. Paul enjoyed it a lot, and hence wants to repeat the very same holiday in February 2022. In the meanwhile the pound appreciated relative to the Turkish lira. In particular, now 1 GBP = 20 TRY. At the same time Turkey had 50% inflation since last year meaning that the hotels, restaurants, etc. are 50% more expensive. Assume that there was zero inflation in the UK. How much cheaper (in GBP) is the holiday this year for Paul? a. 250 GBP b. 125 GBP c. 0 GBP d. 62.5 GBP
4.Paul made holidays in Istanbul in February 2021. The nominal exchange rate then was 1 GBP = 10 TRY, that is he could buy ten Turkish Lira for one Pound Sterling. In total he spent 500 GBP on the hotel, restaurants, etc. Paul enjoyed it a lot, and hence wants to repeat the very same holiday in February 2022. In the meanwhile the pound appreciated relative to the Turkish lira. In particular, now 1 GBP = 20 TRY. At the same time Turkey had 50% inflation since last year meaning that the hotels, restaurants, etc. are 50% more expensive. Assume that there was zero inflation in the UK. How much cheaper (in GBP) is the holiday this year for Paul? a. 250 GBP b. 125 GBP c. 0 GBP d. 62.5 GBP
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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4.Paul made holidays in Istanbul in February 2021. The nominal exchange rate then was 1 GBP = 10 TRY, that is he could buy ten Turkish Lira for one Pound Sterling. In total he spent 500 GBP on the hotel, restaurants, etc.
Paul enjoyed it a lot, and hence wants to repeat the very same holiday in February 2022. In the meanwhile the pound appreciated relative to the Turkish lira. In particular, now 1 GBP = 20 TRY. At the same time Turkey had 50% inflation since last year meaning that the hotels, restaurants, etc. are 50% more expensive. Assume that there was zero inflation in the UK.
How much cheaper (in GBP) is the holiday this year for Paul?
a.
250 GBP
b.
125 GBP
c.
0 GBP
d.
62.5 GBP
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