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If a Basket of Goods Costs $100 in the United

Question 107

Multiple Choice

If a basket of goods costs $100 in the United States and €120 in Europe,purchasing power parity theory predicts that the dollar/euro exchange rate should be _____.


A) $1 = €1.20
B) $1 = €1
C) $1 = €0.80
D) $1 = €0.90
E) $1 = €1.10

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