Both currency exchange fluctuation and price inflation influence an expatriate's purchasing power. In turn, purchasing power has an impact on standard of living. Understanding how changes in exchange rates and inflation may reveal ways to construct pay packages that are most likely to protect standard of living.

Part 2

Assume 1 U.S. dollar equals

5.35

Chinese yuan renminbi. If you exchanged 1 yuan renminbi for dollars, you would receive

$. 19.19.

Round your response to the nearest hundredths place.

Part 3

Last year, you considered purchasing a watch while you were assigned to the London office. The price of the watch was

5,300

British pounds, and the exchange rate was 1 British

pound=$1.20.

This year, the watch was listed at

9,646

British pounds and the exchange rate is 1 British

pound=$1.95.

a) The cost of the watch in U.S. dollars was

$enter your response here

last year. Round your response to the nearest hundredths place.

b) The cost of the watch in U.S. dollars is

$enter your response here

this year. Round your response to the nearest hundredths place.