Assume that the foreign exchange market is in equilibrium and there are no arbitrage opportunities. If the market price of 200 rubles is $1, and the market price of one yen is 2 rubles, how many yen can you buy with $4?
A) 200
B) 2,000
C) 400
D) 4,000
E) 100

Question

Quizplus · Accepted Answer

With $4, you can buy 800 rubles (since $1 = 200 rubles). With 800 rubles, you can buy 400 yen (since 1 yen = 2 rubles).

Assume That the Foreign Exchange Market Is in Equilibrium and There