Assume That a Big Mac Burger Costs $3

Multiple Choice

Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, purchasing power parity predicts that the dollar will:

A) appreciate as the demand for dollars rises in the long run.
B) appreciate as the supply of dollars falls in the long run.
C) depreciate as the demand for dollars falls in the long run.
D) depreciate as the supply of dollars rises in the long run.