Explain the phenomenon of currency devaluation

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Assignment:

Discussion:

Explain the phenomenon of currency devaluation. Assume that initially the US$1 = BR Real 4.

What is the new price of the following products in BR Real if exchange rate changes to US$1 = BR Real 3.5?

  1. An Ipad for US$250
  2. An airline ticket to Brazil for US$900
  3. A Brazilian barbecued dinner for US$30

Who would benefit more from the above exchange rate change - an American tourist in Brazil or a Brazilian tourist in the USA? Why?

Reference no: EM133296678

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