Suppose Purchasing Power Parity Exists in the Car Stereo Market

Multiple Choice

Suppose purchasing power parity exists in the car stereo market in the United States and Australia. If a car stereo costs $230 in the United States and the exchange rate is $1 = $AUD₁.67, the same car stereo may be purchased in Australia for approximately:

A) $AUD 138.
B) $AUD 230.
C) $AUD 2,300.
D) $AUD 384.
E) $AUD 108.