Let P$ be the U.S.dollar price of a basket of particular goods and P be the price of the same basket of goods in Japanese yen.The PPP theory predicts that the dollar/yen exchange rate,E$/ ,should be equivalent to:
A) (1+P ) /P$.
B) (1 + P$) /P .
C) P /P$.
D) P$/P .
Correct Answer:
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