Suppose purchasing power parity (PPP) depends only on hotel rooms. The exchange rate is C$1.00 = US$0.80 and a room at the Weston Hotel in Niagara Falls, New York costs US$200. PPP suggests that the price of a room at the Weston Hotel in Niagara Falls, Ontario should be
A) C$ 200.
B) C$ 250.
C) C$ 160.
D) C$ 125.
E) C$ 80.
Correct Answer:
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