The exchange rate between the US dollar and the Euro is $1 = .9Euro. If Italian shoes costs $100 in the U.S. and 92 Euros inItaly, does purchasing power parity hold in this case? If theexchange rate instead were $1 = .89 Euro, is the rate closer tothat where parity holds or further away?

Answer rating: 100% (QA)

ANSWER To determine if purchasing power parity PPP holds in this case we need to compare the prices ... View the full answer