If Purchasing Power Parity Holds and the Nominal Exchange Rate

question 141

Multiple Choice

If purchasing power parity holds and the nominal exchange rate is 1.5 U.S. dollars for one Canadian dollar, then a Big Mac that costs two Canadian dollars in Canada will cost _____ U.S. dollar(s) in the United States.

• A) 1
• B) 1.5
• C) 2
• D) 3

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