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Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.74
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Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.74

User Saqy G
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1 Answer

2 votes

Answer: US$ 2.58

Step-by-step explanation:

Absolute PPP holding means that the cost of the Elkhead beer is the same in the United States and Canada with the only variation in price being down to the exchange rate.

The spot rate is $1 is to CAN$1.06 which is the current rate.

Beer is CAN $2.74 so in US$ it will be;

=
(2.74)/(1.06)

= US$ 2.58

User Pablo Estevez
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5.0k points
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