Pdf suppose that the pound is pegged to gold at £20 per ounce and the dollar is pegged to gold at $35 per ounce. this implies an exchange rate of $1.75 per pound. if the current market exchange rate is $1.80 per pound, how would you take advantage of this situation? hint: assume that you have $350 available for investment.

1) Buy 10 ounces of gold with the 350 dollars

2) Sell the 10 ounces of gold for £200

3) Exchange £200 for 360 dollars

Explanation:

Due to the difference between the exchange rate in gold and currency, a 2.1%  (1.80 / 1.75) advantage can be obtained.  

You start in the gold market with 350 dollars which are equal to 10 ounces of gold which are equal to £200. This according to the gold prices, witch generate a 1.75 exchange rate.

Then you go to the financial market where the exchange rate is larger (1.80) and with the £200 you get 360 dollars.  

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.

answer; burned it;