If a basket of goods costs $1000 in Canada and the Canadian dollar exchange rate is $1.50 = 1 euro, then the same basket of goods in Europe should cost euros.

Question

Quizplus · Accepted Answer

If the Canadian dollar exchange rate is $1.50 = 1 euro, then 1 euro is equal to 1/1.5 = 0.67 Canadian dollars.
Therefore, the basket of goods costing $1000 in Canada is equivalent to 1000/0.67 = 1492.54 euros in Europe.
Rounding to the nearest euro, the same basket of goods in Europe should cost 666.67 euros, which is option B.

If a Basket of Goods Costs $1000 in Canada and the Canadian