Suppose the exchange rate between the U.S. dollar and the British pound was $1.50 = 1 pound. If the exchange rate went to $2.00 = 1 pound, the price to U.S. importers of a 12,000 pound British automobile would increase by:

Question

Quizplus · Accepted Answer

Initially, the cost of the automobile in U.S. dollars would be 12,000 pounds * $1.50/pound = $18,000. After the exchange rate change, the cost would be 12,000 pounds * $2.00/pound = $24,000. The increase in cost is $24,000 - $18,000 = $6,000.

Suppose the Exchange Rate Between the U