Suppose the exchange rate between the dollar and the euro is 2 euros per dollar. The price of clocks in Europe is 20 euros while the price of the same clock in the United States is $5. It can be concluded that

Question

Quizplus · Accepted Answer

According to the given information, 1 euro is equal to $0.50 ($1/2). This means that a clock in Europe costs $10 (20 euros x $0.50). However, the same clock costs only $5 in the United States. Therefore, money buys more in the United States than in Europe. Option D is the correct choice. The other options are not relevant to the given information.

Suppose the Exchange Rate Between the Dollar and the Euro