Suppose a given basket of goods and services costs 15 dollars in the United States and 14,250 won in Korea. If the exchange rate is 900 won per dollar, purchasing power parity implies that the:
A) exchange rate has attained its long run equilibrium value.
B) dollar must appreciate to restore purchasing power parity.
C) dollar must depreciate to restore purchasing power parity.
D) won must appreciate to restore purchasing power parity.
Correct Answer:
Verified
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