A computer costs $1,100 in the United States. The same computer costs 1,265 euros in France. Assuming that purchasing power parity (PPP) strictly holds, what is the spot exchange rate between the dollar and the euro?
A) $3.75 = 1 euro
B) $1.00 = 2.50 euros
C) $1.00 = 0.869565 euro
D) $1.15 = 1 euro
E) $1.00 = 1.15 euros

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The Answer of A computer costs $1,100 in the United States. The same computer costs 1,265 euros in France. Assuming that purchasing power parity (PPP) strictly holds, what is the spot exchange rate between the dollar and the euro?
A) $3.75 = 1 euro
B) $1.00 = 2.50 euros
C) $1.00 = 0.869565 euro
D) $1.15 = 1 euro
E) $1.00 = 1.15 euros

A Computer Costs $1,100 in the United States