Question: If we know the exchange rate between Country A's currency and Country B's currency and we know the exchange rate between Country B's currency and

If we know the exchange rate between Country A's currency and Country B's currency and we know the exchange rate between Country B's currency and Country C's currency, then we can compute the exchange rate between Country A's currency and Country C's currency.

a. Suppose the exchange rate between the Japanese yen and the U.S. dollar is currently ¥95 = $1 and the exchange rate between the British pound and the U.S. dollar is £0.64 = $1. What is the exchange rate between the yen and the pound?

b. Suppose the exchange rate between the yen and the dollar changes to ¥100 = $1 and the exchange rate between the pound and the dollar changes to £0.55 = $1. Has the dollar appreciated or depreciated against the yen? Has the dollar appreciated or depreciated against the pound? Has the yen appreciated or depreciated against the pound?

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