Question: Suppose the current exchange rate between the U . S . dollar and the Mexican peso is $ 0 . 1 0 = 1 peso.
Suppose the current exchange rate between the US dollar and the Mexican peso is $ peso. Furthermore, suppose the price level in Mexico rises percent while the US price level remains constant. According to the purchasing power parity theory, which of the following exchange rates comes closest to being the equilibrium exchange rate?
Group of answer choices
$ peso
$ peso
$ peso
$ peso
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