Assume that the rand/dollar exchange rate is R12=$1

Question

1. If the rand/dollar exchange rate appreciate to R6=$1, how much will it cost an American to busy a bottle of wine that costs R12 in South Africa?

Answer 1

If the rand/dollar exchange rate appreciates to R6=$1, then the cost of the bottle of wine in South Africa remains at R12. However, since the exchange rate is now R6=$1, the cost of the bottle of wine for an American will be $2 ($12 divided by 6).