Question

If the representative basket of European goods and services costs 40 euros, the representative U.S. basket costs $50, and the dollar/euro exchange rate is $0.90 per euro, then the price of the European basket in terms of U.S. basket is:________

a. [(0.9 $/euro) (40 euro per a European basket)]/[(50 $/U.S. basket)].
b. [(0.9 $/euro) (50 $/U.S. basket)]/[(40 euro per a European basket)].
c. [(50 $/U.S. basket)].
d. [(0.9 $/euro) (40 euro per a European basket) (50 $ U.S. basket)].
e. [(40 euro per a European basket)]/[(50 $/U.S. basket) (0.9 $/euro)].

Answer 1

A) [(0.9 $/euro) (40 euro per a European basket)]/[(50 $/U.S. basket)].

Step-by-step explanation:

Based on the information given the price of the European basket in terms of U.S. basket will be :

Price of the European basket= [(0.9 $/euro) (40 euro per a European basket)]/[(50 $/U.S. basket)]

Price of the European basket=36 $/euro/[50 $/U.S. basket)]

Price of the European basket=$0.72