The Table Below Shows Indexes for the Price Levels for Canada

question 6

Multiple Choice

The table below shows indexes for the price levels for Canada and the United States and the nominal exchange rate 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-US exchange rate in 2008 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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