1. Assume that the exchange rate between the U.S. dollar and the Indian rupee is 43 rupees per dollar. In Jaiphur you look at a nifty Oriental rug. The dealer (since he likes you-in fact, he likes all Americans) offers you this treasure at only 75,000 rupees. In dollars, you are about to spend: (Points : 3)

about $430 about $750 about $1750 about $17,500

Question 2.2. A logical starting point for understanding how exchange rates are determined is a simple idea called ___________, which states that if two countries produce an identical good, the price of the good should be the same throughout the world no matter which country produces it. (Points : 3)

Gresham's law the law of one price purchasing power parity arbitrage