The Table Below Shows Hypothetical Indexes for the Price Levels

question 148

Multiple Choice

The table below shows hypothetical indexes for the price levels for Canada and the United States and hypothetical nominal exchange rates between their currencies (the Canadian-dollar price of 1 U.S.dollar) . TABLE 34-2 Refer to Table 34-2.According to the theory of purchasing power parity (PPP) ,the Canada-U.S.exchange rate in 2014 should have been

• A)115/122 = 0.94.
• B)1.15,the actual exchange rate that year.
• C)(122 × 115)/100 = 140.3.
• D)122,the price level in Canada that year.
• E)122/115 = 1.06.

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