A particular set of golf clubs in the US costs $990.According to absolute purchasing power parity,what should the identical set of clubs cost in Australia when the spot rate is AUD$1 = 0.9125?

Question

Quizplus · Accepted Answer

According to absolute purchasing power parity, the exchange rate should adjust so that the price of the identical set of clubs is the same in both countries. Using the spot rate of AUD$1 = 0.9125, we can set up the equation:
$990(USD) = x(AUD)/0.9125
where x is the price of the identical set of clubs in Australia. Solving for x, we get:
x = $1084.93
Therefore, the correct answer is A.

A Particular Set of Golf Clubs in the US Costs