Suppose Purchasing Power Parity (PPP) Depends Only on Hamburgers

Multiple Choice

Suppose purchasing power parity (PPP) depends only on hamburgers. The exchange rate is C$1.00 = US$0.80 and hamburger prices are C$2.00 in Canada and US$1.50 in the U.S. PPP suggests that the

A) Canadian dollar is overvalued.
B) Canadian dollar is undervalued.
C) demand for Canadian dollars will increase.
D) supply of Canadian dollars will decrease.
E) supply of U.S. dollars will decrease.