Question: Florin and Guilder are two countries separated by a narrow sea. They use currencies called, respectively, the Flop and the Gulp. Suppose the nominal exchange
Florin and Guilder are two countries separated by a narrow sea. They use currencies called, respectively, the Flop and the Gulp. Suppose the nominal exchange rate is 5 Flops per Gulp. A Guilderian trader buys a 40 Flop barrel of Florish pickles by exchanging 8 Gulps, and a Florish trader buys a 10 Gulp crate of Guilderian apples by exchanging 50 Flops. Then the Gulp appreciates to 10 Flops per Gulp. What price must the Guilderian pay for the same 40 Flop barrel of pickles
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