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Assignment 6 2. With an exchange rate of 1 = $5, an American product sells in the United Kingdom for 100.

Assuming that the dollar price remains unchanged, what will be the price of the product in the United Kingdom if the pound is devalued from $5 to $4? Correct answer: C American product sold in UK for 100 it cost US$500 under the old exchange rate where 1 = $5. New exchange rate: 1 = $4 American product which costs US$500 (dollar price remains unchanged), will now cost 125 = x 500.

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