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The theory of purchasing power parity PPP states that in the long-run exchange rates

The theory of purchasing power parity (PPP) states that in the long-run exchange rates between two countries adjusts so that the price of an identical good is the same when expressed in the same currency. A pair of speakers sells for $45.87 in the United States. The exchange rate between the U.S. dollar and the Swiss franc (SFr) is $0.8145 per Swiss franc. Assuming that PPP holds true, how much does the same pair of speakers cost in Switzerland? SFr 64.77 SFr 67.58 SFr 56.32 D SFr 53.50 Suppose the price of the pair of speakers in Switzerland was actually SFr 45.06. Assuming no transaction costs, transportation costs, or import in Switzerland. restrictions, PPP predicts that the demand would Save & Continue Grade It Now Continue without saving

Feb 06 2020 View more View Less

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