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, Ontario costs C$200. PPP suggests that the price of a room at the Weston Hotel in Niagara Falls, New York should be

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Given the exchange rate of C$1.00 = US$0.80, a room costing C$200 would be equivalent to US$160 (200 * 0.80) according to PPP, which suggests that prices should be equivalent when converted at the current exchange rate.

Suppose Purchasing Power Parity (PPP) Depends Only on Hotel Rooms