n Delhi, a haircut costs 135 rupees (INR). The same haircut costs 15 Singapore dollars (SGD) in Singapore. At an exchange rate of 50 IN per SGD, what is the price of an Indian haircut in terms of a Singapore haircut? Keeping all else equal, how does this relative price change if the INR depreciates to 55 INR per SGD? Compared to the initial situation, does a Singapore haircut become more or less expensive in relation to an Indian haircut?
n Delhi, a haircut costs 135 rupees (INR). The same haircut costs 15 Singapore dollars (SGD) in Singapore. At an exchange rate of 50 IN per SGD, what is the price of an Indian haircut in terms of a Singapore haircut? Keeping all else equal, how does this relative price change if the INR depreciates to 55 INR per SGD? Compared to the initial situation, does a Singapore haircut become more or less expensive in relation to an Indian haircut?
Chapter29: International Finance
Section: Chapter Questions
Problem 8P
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Question
In Delhi, a haircut costs 135 rupees (INR). The
same haircut costs 15 Singapore dollars (SGD) in
Singapore. At an exchange rate of 50 IN per SGD,
what is the price of an Indian haircut in terms of a
Singapore haircut? Keeping all else equal, how
does this relative price change if the INR
depreciates to 55 INR per SGD? Compared to the
initial situation, does a Singapore haircut become more or less expensive in relation to an Indian
haircut?
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