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A Big Mac Costs $4

Question 125

Multiple Choice

A Big Mac costs $4.56 in the United States and 9.2 zlotys in Poland.If the exchange rate is 3 zlotys per dollar,purchasing power parity predicts that


A) the dollar will appreciate as the demand for dollars rises in the long run.
B) the dollar will appreciate as the supply of dollars falls in the long run.
C) the dollar will depreciate as the demand for dollars falls in the long run.
D) the dollar will depreciate as the supply of dollars rises in the long run.

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