Question:

Two weeks later, exchange rates change. First National Bank of Tokyo must exchange 9,500 yen for $100.?

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A 14-year-old girl living in Victoria, BC, purchases a new GameCube game system at Toys "R" Us for $150. The game is manufactured by the Nintendo Co. in Tokyo. Toys "R" Us pays Nintendo $100 for the game system. The other $50 covers the cost of workers, rent, and profit for Toys "R" Us.

Nintendo exchanges the $100 at the First National Bank of Tokyo for 8,000 yen. The First National Bank of Tokyo loans the $100 to the Honda Motor Co., which uses it (and a lot of additional money) to expand its automobile manufacturing facility in Alliston, Ontario.

7.4. Two weeks later, exchange rates change. First National Bank of Tokyo must exchange 9,500 yen for $100. The Canadian dollar:

A. Got weaker

B. Appreciated

C. Depreciated

D. Stabilized

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1 ANSWERS


  1. A lot of extra words in that question.  The basic facts are

    (1) the exchange rate was $100 to Y8000

    (2) later, it was $100 to Y9500

    So the same amount of dollars bought more yen.  The dollar was able to buy more, so it .... (I'm sure you can fill in the blank).

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