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QUESTION
A can of pop costs $0.75 on average in the United States and 12 pesos in Mexico. What would be the pes0-dollar exchange rate be if purchasing-power
A can of pop costs $0.75 on average in the United States and 12 pesos in Mexico. What would be the pes0-dollar exchange rate be if purchasing-power parity holds? If a monetary expansion caused all prices in Mexico to double, so that pop rose to 24 pesos, what would happen to the peso-dollar exchange rate?
