If prices double in New York while the prices in Germany remain the same, the purchasing power of the dollar relative to the euro
A) should increase by 50%.
B) should increase by 100%.
C) should decrease by 50%.
D) should decrease by 100%.

Question

Quizplus · Accepted Answer

If prices double in New York but remain the same in Germany, then the cost of living in New York would increase and the purchasing power of the dollar relative to the euro would decrease by 50% because it would take twice as many dollars to purchase goods in New York compared to before the price increase, while the cost of goods in Germany remains the same.

If Prices Double in New York While the Prices in Germany