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Question
Suppose the exchange rate between the U.S. dollar and the British pound is initially 2.00 dollars per pound. According to relative purchasing-power parity, if the price of traded goods rises by 10 percent in the United States and remains constant in the U.K, the exchange rate will become:
a. 1.80 dollars per pound
b. 1.98 dollars per pound
c. 2.02 dollars per pound
d. 2.20 dollars per pound
Answer
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Related questions
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