One unit of a peso in a Latin American country was defined as equivalent to 12 grains of "fine" (pure) gold, while one unit of its neighboring countries’ currency, a dollar, was defined as equivalent to 18 grains of "fine" (pure) gold. Using the gold par value concept (with 480 grains in an ounce), the exchange rate for converting the peso to the dollar isSingle choice
A
1 peso = 1.5 dollars.
B
1 peso = 1 dollar.
C
1.5 pesos = 1 dollar.
D
3 pesos = 2 dollars.
E
2 pesos = 1 dollar.

Question

One unit of a peso in a Latin American country was defined as equivalent to 12 grains of "fine" (pure) gold, while one unit of its neighboring countries’ currency, a dollar, was defined as equivalent to 18 grains of "fine" (pure) gold. Using the gold par value concept (with 480 grains in an ounce), the exchange rate for converting the peso to the dollar isSingle choice

A

1 peso = 1.5 dollars.

B

1 peso = 1 dollar.

C

1.5 pesos = 1 dollar.

D

3 pesos = 2 dollars.

E

2 pesos = 1 dollar.

BlackTom AI · Accepted Answer

One peso contains 12 grains of pure gold and one dollar contains 18 grains, so the exchange rate is determined by the ratio of gold content.

Compute values in grains and ounces (intermediate step using 480 grains/ounce to show cancellation):
- Peso gold per unit = 12 grains = 12/480 = 0.025 ounce of fine gold.
- Dollar gold per unit = 18 grains = 18/480 = 0.0375 ounce of fine gold.
Exchange rate (peso → dollar) = (peso gold) / (dollar gold) = 12 / 18.

Step-by-step arithmetic:
1. 12 / 18 = 2 / 3, so 1 peso = 2/3 dollar (≈ $0.6667).
2. Invert to express dollars in pesos: 1 dollar = 18 / 12 = 3 / 2 = 1.5 pesos.
3. Multiply both sides by 2 to get whole numbers: 2 dollars = 3 pesos, which is the same as 3 pesos = 2 dollars.

Why the correct answer is correct:
- The gold-par exchange rate is proportional to gold content. Because a dollar contains 1.5 times as much gold as a peso (18 ÷ 12 = 1.5), one dollar must be worth 1.5 pesos, equivalently 3 pesos equal 2 dollars. This matches the provided correct choice.

Why the other answer choices are incorrect:
- "1 peso = 1.5 dollars." This would imply a peso contains more gold than a dollar; it contradicts 12 < 18 grains, so false.
- "1 peso = 1 dollar." Implies equal gold content; false.
- "1.5 pesos = 1 dollar." This statement is numerically equivalent to the correct answer (1.5 pesos = 1 dollar ⇔ 3 pesos = 2 dollars). It is therefore correct in value but not the phrasing chosen as the official answer.
- "2 pesos = 1 dollar." Implies 1 peso = $0.50, which is incorrect.

Conclusion: The exchange rate expressed as whole numbers is 3 pesos = 2 dollars, confirming the provided answer.

Similar Questions

The country’s relative productivity is falling. This would cause its currency to:

The country’s relative price level is falling. This would cause its currency to:

Which of these would by hurt by an appreciation of their domestic currency? Check all correct answers Each choice is worth 1 point, which you will receive if you correctly either check or do not check the choice

The stability of the country improves. This would cause its currency to:

A floating exchange rate is

Choose A, B, C or D as the best answer.30. The author’s main argument is that __________.

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler