You are planning a trip to South Africa where the local currency is called the rand. You

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You are planning a trip to South Africa where the local currency is called the rand. You have budgeted US$100 for a hotel room in Johannesburg for when you arrive. The exchange rate is rand9.31 per US$1.

a) If the hotel prices are quoted in rand, what is the most expensive room that you can afford?

b) The exchange rate rises to rand12 per US$1. Has the dollar appreciated or depreciated relative to the rand? (Hint: How much does it cost to purchase rand1?)

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Vikash Kumar

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