Assuming the theory of purchasing power parity holds, if the exchange rate between the United States and Japan is $0.011 per yen ¥), then how much does a $400 Microsoft Xbox cost in Japanese yen?

Question

Quizplus · Accepted Answer

According to the theory of purchasing power parity, the exchange rate between two currencies should reflect the relative price levels of the two countries. In other words, if the exchange rate between the US dollar and Japanese yen is $0.011 per yen, it means that one US dollar can buy 0.011 yen in Japan.
To find out how much a $400 Xbox would cost in yen, we need to convert $400 into yen using the exchange rate:
$400 * 1 / 0.011 yen/dollar = ¥36,363.64
Therefore, the cost of a $400 Microsoft Xbox in Japanese yen would be ¥36,364, which is option C.

Assuming the Theory of Purchasing Power Parity Holds, If the Exchange