A new sweater costs 1,449.95 Russian rubles.How much will the identical sweater cost in Euros if absolute purchasing power parity exists and the following exchange rates apply? $\begin{array}{llcc}
\text {Country } & U.S.\$\text {Equivalent }& \text {Currency per U.S. \$ } \
\text { Russia } &?&29.0190\
\text {Euro } &1.2159&?\
\end{array}$

Question

A new sweater costs 1,449.95 Russian rubles.How much will the identical sweater cost in Euros if absolute purchasing power parity exists and the following exchange rates apply? $\begin{array}{llcc}
  \text {Country   } &  U.S.\$\text {Equivalent }& \text {Currency per U.S. \$ } \
 \text { Russia } &?&29.0190\
 \text {Euro   } &1.2159&?\
\end{array}$

Quizplus · Accepted Answer

The correct answer is A because:1 Russian ruble = 1/29.0190 U.S. dollars1 U.S. dollar = 1/1.2159 eurosTherefore, 1 Russian ruble = (1/29.0190) * (1/1.2159) = 0.0277 euros1,449.95 Russian rubles = 1,449.95 * 0.0277 = 40.09 euros

A New Sweater Costs 1,449 A)€4109 B)€43

A New Sweater Costs 1,449 A)€4109
B)€43