A box of candy costs 28.80 Swiss francs in Switzerland and $21.50 in the United States.Assuming that purchasing power parity (PPP)holds,how many Swiss francs are required to purchase one U.S.dollar? Do not round the intermediate calculations and round the final answer to four decimal places.

Question

Quizplus · Accepted Answer

According to PPP, the exchange rate between two currencies should adjust until the price of an identical basket of goods is the same in both countries. Therefore, we can set up the following equation:
28.80 CHF = $21.50 x Exchange rate
Exchange rate = 28.80 CHF / $21.50 = 1.3395
Therefore, it takes 1.3395 Swiss francs to purchase one U.S. dollar.

A Box of Candy Costs 28