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If Purchasing Power Parity Holds, the Price Level in the U.S

Question 376

Multiple Choice

If purchasing power parity holds, the price level in the U.S. is 120, and the price level in Canada is 140, which of the following is true?


A) the real exchange rate is 120/140.
B) the real exchange rate is 140/120.
C) the nominal exchange rate is 120/140
D) the nominal exchange rate is 140/120

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