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The Price of a Commodity in the US Is USD2

Question 17

Multiple Choice

The price of a commodity in the US is USD2.54, while the price of the same commodity in Australia is AUD3.00 and the AUD/USD exchange rate is 1.8769.
What is the AUD/USD exchange rate compatible with the derivation of PPP?


A) USD/AUD 0.8467
B) AUD/USD 1.8769
C) AUD/USD 0.8467
D) AUD/USD 1.1811

Correct Answer:

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