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QUESTION
A can of Pop costs $0.75 and 12 pesos in Mexico. What would the peso-dollar exchange rate be if purchasing-power parity holds?
A can of Pop costs $0.75 and 12 pesos in Mexico. What would the peso-dollar exchange rate be if purchasing-power parity holds? If a monetary expansion caused all prices in Mexico to double, so that the price of pop rose to 24 pesos, what would happen to the peso-dollar exchange rate?
