According to purchasing-power parity theory,if the same fast-food hamburger costs $2.00 in Canada and 10 Tunisian dinars,what should the exchange rate be?
A) 1 / 5 Tunisian dinars per dollar
B) 1 Tunisian dinar per dollar
C) 5 Tunisian dinars per dollar
D) 25 Tunisian dinars per dollar

Question

Quizplus · Accepted Answer

According to purchasing-power parity, the exchange rate should equalize the price of the hamburger in both countries. If a hamburger costs $2.00 in Canada and 10 Tunisian dinars in Tunisia, the exchange rate should be 5 Tunisian dinars per dollar (10 dinars / 2 dollars = 5 dinars per dollar).

According to Purchasing-Power Parity Theory,if the Same Fast-Food Hamburger Costs