Suppose the same basket of goods costs $100 in the U.S. and 50 pounds in Britain. According to purchasing power parity, if the two countries' price levels do not change, what will be the exchange rate?
a. 2 dollars/pound
b. 4 dollars/pound
c. 5 dollars/pound
d. 0.50 dollars/pound
e. 50 dollars/pound
A
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A price floor set above the equilibrium price is not binding
a. True b. False Indicate whether the statement is true or false
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