Question: Does purchasing power parity hold? If not, does PPP predict that the $C (loonie) will appreciate or depreciate against the U.S. dollar? Explain. The price

Does purchasing power parity hold? If not, does PPP predict that the $C (loonie) will appreciate or depreciate against the U.S. dollar? Explain.

The price of a Big Mac is $C6.88 in Toronto and $5.71 in New York. The exchange rate is $C1.36 per U.S. dollar. The 3month interest rate is 0.17 percent in Canada and 0.10 percent in the United States.

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