Question: Problem 21-3 Purchasing power theory [LO 21-2] From the base price level of 100 in 1979, Saudi Arabian and U.S. price levels in 2008 stood

Problem 21-3 Purchasing power theory [LO 21-2] From the base price

Problem 21-3 Purchasing power theory [LO 21-2] From the base price level of 100 in 1979, Saudi Arabian and U.S. price levels in 2008 stood at 310 and 632, respectively. Assume the 1979 $/riyal exchange rate was $0.70/riyal. Suggestion: Using purchasing power parity, adjust the exchange rate to compensate for inflation. That is, determine the relative rate of inflation between the United States and Saudi Arabia and multiply this times $/riyal of 0.70 points Skipped What should the exchange rate be in 2008? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Exchange rate Iriyal eBook

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