Suppose that the current exchange rate between the dollar and peso is $1 equals 10 pesos. If a firm in Mexico wanted to purchase $100,000 worth of U.S. televisions, how many pesos must they exchange?

Question

Quizplus · Accepted Answer

To purchase $100,000 worth of U.S. televisions, the Mexican firm would need to exchange $100,000 / $1 = 100,000 dollars. Since $1 equals 10 pesos, the Mexican firm would need to exchange 100,000 dollars x 10 pesos/dollar = 1,000,000 pesos. Therefore, the correct answer is choice C.

Suppose That the Current Exchange Rate Between the Dollar and Peso