If a bicycle costs $200 in the U.S.and 50 Swedish kronor in Sweden and the exchange rate is 0.25 Swedish krona per dollar,then the Swedish krona is:

Question

Quizplus · Accepted Answer

The correct answer is A because the price of the bicycle in Sweden is 50 Swedish kronor, which is equal to $12.50 (50 * 0.25). This is the same as the price of the bicycle in the U.S., which is $200. Therefore, the Swedish krona is correctly valued according to PPP.

If a Bicycle Costs $200 in the U