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QUESTION
A can of soda cost $0.75 in the US and 12 pesos in Mexico. What would the peso/dollar exchange rate be if purchasing power parity holds?
A can of soda cost $0.75 in the US 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 soda rose to 24pesos, what would happen to the peso/dollar exchange rate? P
