If a basket of goods and services costing $100 in the U.S. costs 20,000 yen in Japan, then the purchasing power parity exchange rate is _____ per dollar.
A) 50 yen
B) 100 yen
C) 150 yen
D) 175 yen
E) 200 yen

Question

Quizplus · Accepted Answer

The purchasing power parity (PPP) exchange rate is calculated by dividing the cost in the foreign currency (20,000 yen) by the cost in the domestic currency ($100), which equals 200 yen per dollar.

If a Basket of Goods and Services Costing $100 in the U.S