If a Basket of Goods Costs $100 in the United

Multiple Choice

If a basket of goods costs $100 in the United States and €120 in Europe,PPP theory predicts that the dollar/euro exchange rate should be:

A) $1 = €1.20.
B) $1 = €1.
C) $1 = €0.87.
D) $1 = €0.83.