Business, 05.06.2020 21:01 niyawilliams23

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 5 Flops per Gulp.

A Guilderian trader buys a 40 Flop barrel of Florish pickles by exchanging 8 Gulps, and a Florish trader buys a 10 Gulp crate of Guilderian apples by exchanging 50 Flops.

Then the Gulp depreciates to 2 Flops per Gulp.

a. How much must the Guilderian pay for the same 40 Flop barrel of pickles? (Gulps)

b. How much must the Florish trader pay for the same 10 Gulp crate of apples? (Flops)

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Florin and Guilder are two countries separated by a narrow sea. They use currencies called, respect...

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