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$0.70 and hamburger prices are C$2.00 in Canada and US$1.50 in the U.S. PPP suggests that the

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