Question

Susan, an entrepreneur, wants to sell handmade goods from people in developing countries to customers in the United States. Why would it be necessary for there to be a way to exchange currency in order for this to happen?

Answer 1

The correct answer is A.  U.S. dollars would not be useful for people in developing countries to use, but it would still help them and Susan make a profit.

Answer 2

The correct answer is: "Currency exchange would allow Susan to accept U.S. dollars, yet still pay the craftspeople in the currency that would be most useful to them."

An international monetary system is necessary to undertake sales and purchases that cross national borders.

If Susan sells her products in the US, she will receive US dollars in exchange for them but she needs to pay her emplooyes, back in the developing country, in the national currency of such country. Therefore, she needs to sell those dollars in other to buy national currency from the developing country and, in order to do so, she needs to make use of the institutions where such exchange could be conducted.