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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.For there to be purchasing power parity,the nominal exchange rate for the dollar must be:

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Purchasing power parity implies that the price of the car should be the same in both countries when converted at the exchange rate. At £0.40 per dollar, the car would cost £12,000 in both Canada and Britain, maintaining parity.

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