1. If the exchange rate (dollars for pesos) is $0.11 per peso,then the cost of a good or service you purchase while in Mexico for850 pesos is ________

Suppose that in Thailand the exchange rate is determined by themarket and the government makes no attempt to determine its level.This is an example of a ____________(Fixed ORfloating) exchange ratesystem.

2. Suppose that Nevada Co., a US-based MNC, makes regular, monthlypurchases of materials from a German supplier named Spicurity.These regular payments are typically in the amount of 300,000euros. Last month the exchange rate was $1.93 per euro. Nevada Co.only has cash reserves in dollars, while Spicurity only has cashreserves in euros. Suppose both companies use the same bank.

In order to conduct this transactionlast month, Nevada Co. required $_____ to pay for thematerials. Thus, the bank handling the transaction reduced Nevada’saccount by this amount, denominated in __________(euros OR dollars). The bank then converted this amountto ___________ ________________( eurosOR dollars). and credited it to Spicurity’s account.

3. Suppose that Nevada Co., a US-based MNC, makes regular, monthlypurchases of materials from a German supplier named Spicurity.These regular payments are typically in the amount of 300,000euros. Last month the exchange rate was $1.93 per euro. Nevada Co.only has cash reserves in dollars, while Spicurity only has cashreserves in euros. Suppose both companies use the same bank.

In order to conduct this transaction last month, Nevada Co.required $________ to pay for the materials. Thus, the bankhandling the transaction reduced Nevada’s account by this amount,denominated in ___________( euros ORdollars). . The bankthen converted this amount to

___________ ___________( euros ORdollars). andcredited it to Spicurity’s account.