If the U.S. dollar were replaced with a "new dollar" at an exchange rate of 1 new dollar for 4 old dollars, then an hourly wage of $12 would become an hourly wage of 3 new dollars.

Question

Quizplus · Accepted Answer

If the exchange rate is 1 new dollar for 4 old dollars, then the conversion factor is 1/4 for old dollars to new dollars. Therefore, an hourly wage of $12 would convert to (1/4) x $12 = $3, which is equivalent to 3 new dollars.

If the US Dollar Were Replaced with a "New Dollar" at an at an Exchange