According to purchasing-power parity theory,if the same fast-food hamburger costs $2.50 in Canada and 10 Tunisian dinars,what should the exchange rate be?

Question

Quizplus · Accepted Answer

According to purchasing-power parity, the exchange rate should equalize the price of the hamburger in both countries. If a hamburger costs $2.50 in Canada and 10 Tunisian dinars in Tunisia, the exchange rate should be 10 dinars / $2.50 = 4 dinars per dollar.

According to Purchasing-Power Parity Theory,if the Same Fast-Food Hamburger Costs