Suppose That the Exchange Value of the Dollar Equals Two

question 191

Multiple Choice

Suppose that the exchange value of the dollar equals two British pounds.If in San Francisco a computer costs $1,000 and in London it costs 2,000 pounds, then

• A) British consumers will buy computers in San Francisco.
• B) Americans will buy computers in London.
• C) purchasing power parity prevails.
• D) purchasing power parity does not prevail.

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