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Florin and Guilder are two countries separated by a narrow sea. They use currencies called, respectively, the Flop and the Gulp. Suppose the nominal...
Florin and Guilder are two countries separated by a narrow sea. They use currencies called, respectively, the Flop and the Gulp.
Suppose the nominal exchange rate is .5 Flops per Gulp.
A Guilderian trader buys a 40 Flop barrel of Florish pickles by exchanging 80 Gulps, and a Florish trader buys a 20 Gulp crate of Guilderian apples by exchanging 10 Flops.
Then the Gulp appreciates to 2 Flops per Gulp.
a. What price must the Guilderian pay for the same 40 Flop barrel of pickles? ____ (Gulps)
b. How much must the Florish trader pay for the same 20 Gulp crate of apples?____ (Flops)
