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Suppose the Same Basket of Goods Costs $100 in the USA

Question 4

Multiple Choice

Suppose the same basket of goods costs $100 in the USA and £80 in Britain. According to PPP, if the prices do not change, what will be the exchange rate?


A) $5 per pound
B) $4 per pound
C) $1.25 per pound
D) $0.80 per pound

Correct Answer:

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