Question

Mr. Bubba took a spring break trip with kids and parents to Dubai in the United Arab Emirates. The money they use there is UAE Dirham. The kids were surprised to learn that a coke out of the machine cost 4 Dirham and a McDonald's Big Mac meal cost 25 Dirham. They were worried that they would run out of money because everything was so expensive. However, Joe Bob pulled out a sheet of paper Mr. Bubba had given him that said $1 = 3.75 Dirham. The kids were relieved that things were not that expensive. What economic term is this an example of and made the kids feel better about their money?

A. Exchange Rate
B. Supply
C. Demand
D. Currency

Answer 1

The economic term in this situation is Exchange Rate, which made the kids feel better about their money because they could exchange their dollars for more Dirham.

Step-by-step explanation:

The economic term that this situation is an example of is Exchange Rate. An exchange rate is the value of one currency in terms of another currency. In this case, the exchange rate of $1 to 3.75 Dirham made the kids feel better about their money because it indicates that their dollars can be converted into more Dirham, making the Dirham seem less expensive.