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If the exchange rate is 8 moroccan dirhams per u.s. dollars, a crate of oranges costs 400 dirhams in the moroccan capital of rabat, and a similar crate of oranges in miami sells…

If the exchange rate is 8 moroccan dirhams per u.s. dollars, a crate of oranges costs 400 dirhams in the moroccan capital of rabat, and a similar crate of oranges in miami sells…
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If the exchange rate is 8 moroccan dirhams per u.s. dollars, a crate of oranges costs 400 dirhams in the moroccan capital of rabat, and a similar crate of oranges in miami sells for $55 dollars, then

User Iqbal Khan
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1 Answer

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the real exchange rate is greater than one and arbitrageurs could profit by buying oranges in Morocco and selling them in the U.S.
User Meziantou
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