In equilibrium, if $1 = 0.5 pound sterling and 1 pound sterling = 40 Swiss francs, the exchange rate between dollar and franc will be
A) 1 franc = $0.10.
B) 1 franc = $0.20.
C) $1 = 80 francs.
D) $1 = 20 francs.

Question

Quizplus · Accepted Answer

To find the exchange rate between the dollar and the franc, we first find the value of 1 dollar in francs. Since $1 = 0.5 pound sterling and 1 pound sterling = 40 francs, $1 = 0.5 * 40 = 20 francs. Thus, the exchange rate is $1 = 20 francs.

In Equilibrium, If $1 = 0