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Comment on the following statement:

“If a British tourist can buy one U.S. dollar for 0.65 British pounds and a Japanese tourist can by one U.S. dollar for 130 Japanese yen, we can conclude that, on average, goods in Japan are about 200% more expensive than in Great Britain

Category : Economics | Answer: 1 6 Months Ago

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The price of U.S. dollar in another currency does not give any indication of whether goods in that country are more or less expensive than in the U.S.; it simply means that these currencies are exchanged at a certain rate. Similarly, the fact that the British pound is worth more than the Japanese yen when it comes to buying one U.S. dollar does not imply that product prices in Japan, on average, are more expensive than product prices in Great Britain.

6 Months Ago
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