Confusion on Currency (PEV)

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Lin84
Lin84 Registered Posts: 12 New contributor 🐸
I was just practicing some questions from the book. I'm slightly confused with question 4.4 on page 133, part e. I thought that the equation was

price x (rate converting to/rate converting from) (same as indices P.36)

So in this case £5 x ($2/$2.50) = £4

But the answers in the book has done it the other way round:

£5 x ($2.50/$2) = £6.25

Could some one please explain this to me please.

Thank you

Lin

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  • acky2106
    acky2106 Registered Posts: 52 Regular contributor ⭐
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    What book are you studying from Lin?
  • sjf
    sjf Registered Posts: 5 New contributor 🐸
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    hi

    I could be wrong but I think it is because it is a currency rate difference not a time differance like the index numbers:confused1:
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