n Delhi, a haircut costs 135 rupees (INR). The same haircut costs 15 Singapore dollars (SGD) in Singapore. At an exchange rate of 50 IN per SGD, what is the price of an Indian haircut in terms of a Singapore haircut? Keeping all else equal, how does this relative price change if the INR depreciates to 55 INR per SGD? Compared to the initial situation, does a Singapore haircut become more or less expensive in relation to an Indian haircut?

n Delhi, a haircut costs 135 rupees (INR). The same haircut costs 15 Singapore dollars (SGD) in Singapore. At an exchange rate of 50 IN per SGD, what is the price of an Indian haircut in terms of a Singapore haircut? Keeping all else equal, how does this relative price change if the INR depreciates to 55 INR per SGD? Compared to the initial situation, does a Singapore haircut become more or less expensive in relation to an Indian haircut?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter29: International Finance

Section: Chapter Questions

Problem 8P

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