Asked by
Leandra Gallegos
on Nov 24, 2024
Verified
A widget costs $1000 in the US and CAD$1200 in Canada.The current exchange rate is 1USD=1.09CAD.Given purchasing power parity,the Canadian dollar would_______to equilibrate prices
A) Appreciate
B) Depreciate
C) Not change
D) None of the above
Purchasing Power Parity
An economic theory that compares different countries' currencies through a "basket of goods" approach to determine exchange rate effects on goods' prices.
Exchange Rate
The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for one unit of another currency.
Canadian Dollar
The official currency of Canada, represented by CAD or C$, and divided into 100 cents.
- Acquire knowledge of the elements that drive currency demand and determine exchange rates.
- Implement the principle of Purchasing Power Parity to evaluate the price of commodities across various nations.
Verified Answer
RF
Learning Objectives
- Acquire knowledge of the elements that drive currency demand and determine exchange rates.
- Implement the principle of Purchasing Power Parity to evaluate the price of commodities across various nations.