Suppose that the U.S. price of gold is $35 per ounce and the German price of gold is 100 Deutsche Marks (DMs) per ounce. What is the implied exchange rate between the dollar and the DM?
A) $0.35 = DM1
B) $3500 = DM1
C) $2.8571 = DM1
D) $0.28571 = DM1

Question

Quizplus · Accepted Answer

The implied exchange rate is found by dividing the U.S. price by the German price (or vice versa), which gives $35 / 100 DM = $0.35 per DM.

Suppose That the U