ECONOMICS (CBSE/UGC NET)

ECONOMICS

FOREIGN CURRENCY MARKETS

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Assume the exchange rate from Mexican pesos to American dollars is 8 pesos to $1. If a bushel of wheat is 12 pesos in Mexico, how many bushels in Mexico could $1200 buy?

A	400 bushels
B	800 bushels
C	1000 bushels
D	200 bushels

Explanation:

Detailed explanation-1: -Today Wednesday, March 8, 2023 the average US Dollar exchange rate in Mexico is 1 Dollar = 18.0211 Pesos.

Detailed explanation-2: -If you don’t know the exchange rate, you can use this formula: starting amount (base currency) / ending amount (foreign currency) = exchange rate. Use the currency conversion formulas mentioned earlier to calculate how much you’d get for your currency if you were trading in the forex market.

Detailed explanation-3: -Use the exchange rate formula. The formula is: Starting Amount (Original Currency) / Ending Amount (New Currency) = Exchange Rate. For example, if you exchange 100 U.S. Dollars for 80 Euros, the exchange rate would be 1.25. But if you exchange 80 Euros for 100 U.S. Dollars, the exchange rate would be 0.8.

Detailed explanation-4: -Banks and credit unions are generally the best places to exchange currency, with reasonable exchange rates and the lowest fees.

There is 1 question to complete.