According to Purchasing-Power Parity,if the Same Basket of Goods Costs

question 25

Multiple Choice

According to purchasing-power parity,if the same basket of goods costs $100 in the U.S.and 50 pounds in Britain,then what is the nominal exchange rate?

• A)2 pounds per dollar
• B)1 pound per dollar
• C)1/2 pound per dollar
• D)None of the above is correct

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Definitions:

Interest

The payment required for obtaining the service of borrowing funds, typically denoted as a yearly percentage rate.

Interest Rate

The proportion of interest charged to a borrower by a lender for the use of borrowed money.

Investment

The operation of earmarking financial resources with the hope of obtaining a return or profit.

Simple Interest

A method of calculating interest where the interest charge is based on the original principal only, not on the accumulated interest.