Question: 6. (2 points) Suppose the same goods always cost strictly more in the U.S. than in Europe in their respectively local currency. That is, if

6. (2 points) Suppose the same goods always cost strictly more in the U.S. than in

Europe in their respectively local currency. That is, if a computer costs 1,000 euros

in Europe, the same computer must cost more than 1,000 dollars in the U.S.

Assume the purchasing power parity theory is true. Which of the below are possible

values of dollar/euro exchange rates? (may choose multiple or none)

(a) 1 dollar = 2 Euros

(b) 1 dollar = 1.5 Euros

(c) 1 dollar = 1 Euro

(d) 1 dollar = 0.5 Euros

(e) 1 dollar = 0.2 Euros

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