Question

If a market basket of goods cost $100 is the US and 70 euros in France, then the PPP exchange rate would be $.70/euro.A. TrueB. False

Answer 1

False

Step-by-step explanation:

Given that,

Market basket of goods cost in United states = $100

Market basket of goods cost in France = 70 euros

Purchasing power parity is calculated as follows:

= (Cost of basket of goods in Euros) ÷ (Cost of same basket of goods in dollars)

= 70 ÷ 100

= 0.7 euro per dollar

Therefore, the statement is false.