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Let P$ Be the U ×\times Be the Price of the Same Basket of Goods in Particular

Question 64

Multiple Choice

Let P$ be the U.S.dollar price of a basket of particular goods and P ×\times be the price of the same basket of goods in Japanese yen.The PPP theory predicts that the dollar/yen exchange rate,E$/ ×\times ,should be equivalent to:


A) (1+P ×\times ) /P$.
B) (1 + P$) /P ×\times .
C) P ×\times /P$.
D) P$/P ×\times .

Correct Answer:

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