If a basket of goods costs 10 dollars in the United States and 11 euros in Belgium, then purchasing power parity will exist if the exchange rate between the euro and the dollar is:

Question

Quizplus · Accepted Answer

Purchasing power parity (PPP) exists when the cost of a basket of goods is the same in both countries when measured in a common currency. Here, for PPP to hold, 10 dollars must be equivalent to 11 euros, meaning 1 dollar equals 1.1 euros.

If a Basket of Goods Costs 10 Dollars in the United