Question

Consider a U.S. importer desiring to purchase merchandise from a Dutch exporter invoiced in euros, at a cost of €512,100. The U.S. importer will contact his U.S. bank (where of course he has an account denominated in U.S. dollars) and inquire about the exchange rate, which the bank quotes as €1.0242/$1.00. The importer accepts this price, so his bank will ________ the importer's account in the amount of ________.

Answer 1

Answer:

The importer accepts this price, so his bank will debit the importer's account in the amount of $500000

Explanation:

Debiting an account removes money from the account. Crediting an account adds money to the account.

The bank will  therefore debit his account because the money will be taken out and paid to the exporter.

The amount that the importer pays in dollars can easily be calculate as:

€512,100 / €1.0242 = $500000