Lukes Trucks and Trailers, Inc. manufactures parts for long-haul tractor and trailer firms and is located in the United States. It purchases goods from Canada which are then sold to customers in the United States. The current exchange rate is C$1.35/$ (C$ stands for Canadian dollar and $ stands for U.S. dollar)

Firms may be motivated to have multinational activities. One of the motivations may be have access to low-cost labor abroad. True or False

The Exchange rate is the price at which one currency can be exchanged for another currency. True or False

Using the data above, compute the indirect quote

$0.74/C$

$1.35/C$

$1.74/C$

$0.35/C$

None of the answers provided is correct.

If the firm purchases the goods at a cost of 15,000 Canadian dollars, what is the cost in U.S. dollars if the indirect quote is actually $0.93/C$?

15,000 U.S. Dollars

20,270 U.S. Dollars

13,950 U.S. Dollars

None of the answers provided is correct.

Everything else being constant, if the exchange rate is C$1.25/$, then Luke would have to

Pay more than 9,000 U.S. Dollars to buy the Canadian Goods which cost 10,000 Canadian Dollars

Pay less than 9,000 U.S. Dollars to buy the Canadian Goods which cost 10,000 Canadian Dollars

Pay 9,000 U.S. Dollars to buy the Canadian Goods which cost 10,000 Canadian Dollars

None of the answers provided is correct.