2. Comparing prices in different countries Suppose you live in the United States and plan a vacation in Ireland. You want to find the least expensive airfare, so you request quotes from Independence Airline (a U.S. airline) and Shamrock Skyways (an Irish airline). The following table shows the quoted prices in national currencies. Suppose that the current exchange rate is 7.04 $/. Airline Price Independence Airline $1,900 Shamrock Skyways 650 To compare the prices of the two tickets, you need to express them in a common currency. The price of the Shamrock Skyways ticket in dollars is fs sd . Therefore, the w= ticket is cheaper for you to buy. Your friend travels to Ireland a month later. At the time he buys his ticket, the prices quoted by the two airlines are the same as before, but the exchange rate has fallen to 1.80 $/. Assuming that your friend is looking for the least expensive deal, he will travel with we. In this scenario, the U.S. dollar ~w against the British pound. As a result, the dollar price of an airplane ticket sold by a U.K. company ~ . Since the same logic applies to other goods and services, you can say that U.K. goods and services became Ww expensive to U.S. consumers