Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn

Exercise 8

A meal at a McDonald's restaurant in New York costs $8. The identical meal at a McDonald's restaurant in London costs £4. According to the purchasing-power-parity theory of exchange rates, the exchange rate between U.S. dollars and British pounds should tend to move toward:
a. $2 = £1.
b. $1 = £2.
c. $4 = £1.
d. $1 = £4.