Florin and Guilder are two countries separated by a narrow sea. They use currencies called, respectively, the Flop and the Gulp. Suppose the nominal exchange rate is 20 Flops per Gulp. A Guilderian trader buys a 120 Flop barrel of Florish pickles by exchanging 6 Gulps, and a Florish trader buys a 4 Gulp crate of Guilderian apples by exchanging 80 Flops. Then the Gulp depreciates to 10 Flops per Gulp. Instructions: Enter your answers as whole numbers. How much must the Guilderian pay for the same 120 Flop barrel of pickles?  Gulps How much must the Florish trader pay for the same 4 Gulp crate of apples?  Flops

Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter13: Open-economy Macroeconomics: Basic Concepts
Section13.3: A First Theory Of Exchange-rate Determination: Purchasing-power Parity
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Florin and Guilder are two countries separated by a narrow sea. They use currencies called, respectively, the Flop and the Gulp.

Suppose the nominal exchange rate is 20 Flops per Gulp.

A Guilderian trader buys a 120 Flop barrel of Florish pickles by exchanging 6 Gulps, and a Florish trader buys a 4 Gulp crate of Guilderian apples by exchanging 80 Flops.

Then the Gulp depreciates to 10 Flops per Gulp.

Instructions: Enter your answers as whole numbers.

  1. How much must the Guilderian pay for the same 120 Flop barrel of pickles?

     Gulps

  2. How much must the Florish trader pay for the same 4 Gulp crate of apples?

     Flops

 

 
 
 
 
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