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Question: Vietnam and Columbia both produce coffee. Vietnam's currency is called the Dong (VND) and Columbia's currency is called the peso (COP). In Vietnam, coffee sells for 5,000 VND per pound of coffee. The exchange rate is 30VND = 1 COP (e_VND/COP = 30). Under the Monetary Approach to the external balance and exchange rate determination, the law of one price (LOP) is assumed. If the LOP holds for coffee trade between Vietnam and Columbia, what is the price of coffee in Columbia, measured in Columbian pesos (COP)?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M93137560

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