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How Much is That in Deskmoola? How does commerce work when a business or person using one type of currency wants to purchase goods and services from a business or person in another country? Classybucks are not the medium of exchange in Deskopolis. Classybucks are not accepted as money in Deskopolis. For the French flashcard sale to succeed, Classybucks must be converted into Deskmoola. 1. The Classybuck-to-Deskmoola exchange rate is 1:0.86. The price of the French flashcards is 7 DMs (Deskmoolas) per package. Classtopians need 50 packages. Calculate the cost of the flashcards in Classybucks (CB). _ ______________________________________________________________________________ _ ______________________________________________________________________________ 2. What a bad day for Deskopolis! There has been a political crisis, coupled with some bad economic news. How might these events effect the strength of Deskmoola? _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ 3. The value of Deskmoolas has fallen. The exchange rate is now 1:0.75. The price of the cards is still 7 DMs per package. Calculate the savings for Classtopia if the sale takes place at this exchange rate. _ ______________________________________________________________________________ _ ______________________________________________________________________________ 4. Classtopians and Deskopolians are ready to deal. There is a standard 1% currency conversion bank fee charged to the Classtopians. How much is that for the 301CB sale? _ ______________________________________________________________________________ 5. The Classtopians want to pay for the flashcards with Bitcoins (BTC). These are accepted in Deskopolis. Will this require payment of a currency conversion fee? Explain. _ ______________________________________________________________________________ _ ______________________________________________________________________________ _ ______________________________________________________________________________ BONUS: True or False: ___ Currency values are often an indicator of the issuing country’s economic health; an unstable currency or falling value may indicate economic. problems. Many things can cause the value of a currency to rise or fall , including bad or good economic news or events. It is possible that the events will impact the value of Deskmoola, causing it to lose value . The conversion of 1CB:0.86DB makes the total cost 301 CBs. 1 package of Flashcards = 7DM x 0.86 = 6.02CB x 50 = 301 7DM x 0.75 = 5.95CB x 50 = 262.50 301 - 262.50 = 38.50CB savings 3.01CB T No, VC enables a peer-to-peer (P2P) exchange without the involvement of a bank or government. No conversion is necessary so no fee will be incurred (arguably one of the advantages of BTC or VC, in general). PRODUCT PREVIEW
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Lesson 5 | Crazy for Currency
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