Florin and Guilder are two countries separated by a narrow sea. They use currencies called, respectively, the Flop and the Gulp.
a. The nominal exchange rate is 0.2 Flops to one Gulp.
If a trader wanted to exchange 50 Gulps for Flops, how many Flops would she get?
b. Suppose a trader turns in 40 Gulps, and gets 200 Flops.
What is the nominal exchange rate?
c. Suppose the nominal exchange rate is 0.5 Flops/Gulp.
A Guilderian trader wants to buy a barrel of Florish turnips for 15 Flops.
How many Gulps must he convert to get that many Flops?
a ) Ans: 10 Flops
1 Gulp = 0.2 Flops
50 Gulp = 0.2 * 50 = 10 Flops
b ) Ans: The nominal exchange rate is 5 Flops to 1 Gulp
40 Gulps are required to get 200 Flops
So 1 Gulp = 200 / 40 = 5 Flops
Hence , the nominal exchange rate is 5 Flops to 1 Gulp
c ) Ans: He must convert 30 Gulp to get that many Flops.
The nominal exchange rate is 0.5 Flops/Gulp.
A Guilderian trader wants to buy a barrel of Florish turnips for 15 Flops. Now he has to pay;
0.5 Flops = 1 Gulp
15 Flops = 15 / 0.5 = 30 Gulp
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