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Gold Standard: French franc. Before World War I, $20.67 was needed to buy one ounce of gold. If, at the same time, one ounce of gold could be purchased in France for FF410.00, what was the exchange rate between French francs and U.S. dollars

Respuesta :

Answer:

The  implied French franc/US dollar exchange rate will be  - FF19.84/$

or

$0.0504/FF

Explanation:

Assuming the price of an ounce of gold in US dollars ($/oz)                   $20.67

Assuming the price of an ounce of gold in French francs (FF/oz)            410.00

The  implied French franc/US dollar exchange rate will be  :

FF410/$20=FF19.84/$ ( FF19.84 is equal to one dollar)

Alternatively, this can be expressed as follow :

$0.0504/FF (i.e $0.0504 is equal to one FF - 1/19.84)

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