Financial Crises and Exchange Rates

Prompt: You are living in Indonesia in early 1998. The country is experiencing a financial and exchange-rate crisis. When you arrived late last year, the exchange rate was 3,000 rupiah per dollar (in other words, $1 would buy 3,000 rupiah, the local currency). Today, the exchange rate is 12,000 rupiah per dollar. The price of food is much more expensive; however, you notice that the prices of electronics haven’t changed much. You are looking to buy a small television priced at 240,000 rupiah (roughly $80 at the old exchange rate). At the current rate, you can purchase the television for the equivalent of $20. You continue to be paid in U.S. dollars. Should you take advantage of this situation?

Notes:

1. From an economics perspective, if a buyer and seller are willing and able to transact at a certain price, there are welfare gains to the transaction.

2. “’It’s no good, it’s no good!’ says the buyer—then goes off and boasts about the purchase.” (Proverbs 20:14 NIV)

Instructions: The post must be a minimum of 350 words, APA format with a minimum of one citation. A biblical reference about the topic must be included.