Brain Teasers
Canadian and US Dollars
At one time, the Canadian and US dollars were discounted by 10 cents on each side of the border (i.e., a Canadian dollar was worth 90 US cents in the US, and a US dollar was worth 90 Canadian cents in Canada). A man walks into a bar on the US side of the border, orders 10 US cents worth of beer, pays with a US dollar and receives a Canadian dollar in change. He then walks across the border to Canada, orders 10 Canadian cents worth of beer, pays with a Canadian dollar and receives a US dollar in change. He continues this throughout the day, and ends up dead drunk with the original dollar in his pocket.
Who pays for the drinks?
Who pays for the drinks?
Answer
The man paid for all the drinks. But, you say, he ended up with the same amount of money that he started with! However, as he transported Canadian dollars into Canada and US dollars into the US, he performed "economic work" by moving the currency to a location where it was in greater demand (and thus valued higher). The earnings from this work were spent on the drinks.Hide Answer Show Answer
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Comments
that's clever, although I don't understand how that could be... correct me if I'm wrong, but a canadian dollar is always worth the same no matter where and the same with American!
It does say "at one time" meaning not anymore.
I'd say the value for the beer was obtained by the devaluation of the currencies. After all, the drinker is making more currency available in the respective countries. When the money supply goes up, the value goes down.
I say name the day this was true and show me a newspaper(s) with the dual exchange rates that prove it.
I don't know whether this was an actual historical situation but it is akin to the share market where someone buys shares for $100 sells them for $200 and then when the price falls buys them back for $100 ending up with the same shares and $100 profit. The profit has been sucked out of the market. Same idea here as in a currency market where objects (coins or shares) have their value determine my a market.
In my opinion this is what has led to the current global currency crisis because too many paper shufflers have sucked huge amounts of money out of the market which has now collapsed because no one wants to honour the artificial value placed on property, shares, currency etc. by the market.
In my opinion this is what has led to the current global currency crisis because too many paper shufflers have sucked huge amounts of money out of the market which has now collapsed because no one wants to honour the artificial value placed on property, shares, currency etc. by the market.
This sort of situation explains why economics is called "the dismal science".
What the person above me said. Technically, the economies - and hence the citizens of - both countries paid for the beer, even tho it wasn't enough to hurt the countries. HOWEVER, this must never have been true (the dual exchange rates) or banks would have bought and sold gold on both sides of the border $100 million at a time and made a fortune in gold without spending any money! This would have made a travesty of both monetary systems and collapsed the economies immediately!
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