Question 49
Balance of Payments and Exchange RatesIf the United Kingdom buys gold for £60 an ounce and Nigeria buys the same ounce for ₦ 500, what will be the United Kingdom's exchange rate with Nigeria?
- A.£0.05 = ₦1.00
- B.£0.06 = ₦1.00
- C.£0.11 = ₦1.00
- D.£0.12 = ₦1.00
Show the answer and explanation
Answer: D (£0.12 = ₦1.00)
Explanation
£60 = ₦500, so ₦1 = 60 ÷ 500 = £0.12.