A golf club costs $143 in the United States. The same club costs AU$100 in Australia. Assume that purchasing power parity holds. What is the exchange rate between the U.S. and Australian dollars?

Question

Quizplus · Accepted Answer

The exchange rate can be found by dividing the cost in one currency by the cost in the other currency. Here, $143 / AU$100 = $1.43. This means 1 Australian dollar is equivalent to $1.43 U.S. dollars, assuming purchasing power parity holds.

A Golf Club Costs $143 in the United States