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A car costs $30 000 in Canada and the exchange rate is $1 = £0.50.The same car costs £12 000 in Britain.
-(Scenario: Purchasing Power Parity)Refer To Scenario: Purchasing Power Parity.To have the purchasing power parity,the pound must:

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The car costs $30,000 in Canada, which is equivalent to £15,000 at the exchange rate of $1 = £0.50. Since the car costs only £12,000 in Britain, the pound must appreciate to equalize the purchasing power.

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