Suppose the Same Basket of Goods Costs $100 in the U.S.and

question 22

Multiple Choice

Suppose the same basket of goods costs $100 in the U.S.and 50 pounds in Britain.According to purchasing power parity,if the two countries' price levels do not change,what will be the exchange rate?

• A) 2 dollars/pound
• B) 4 dollars/pound
• C) 5 dollars/pound
• D) 0.50 dollars/pound
• E) 50 dollars/pound