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NYC NYC
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8 years ago
Suppose that the price of a DVD recorder is $80 in the United States and 900 pesos in Mexico. If the current exchange rate is 10 pesos to the dollar, then purchasing power parity theory would predict that in the long run:
A) Mexico will begin to export DVD recorders to the United States.
B) the exchange value of the peso will depreciate.
C) the exchange value of the dollar will depreciate.
D) the exchange value of the peso will appreciate.
Textbook 
Principles of Macroeconomics

Principles of Macroeconomics


Edition: 11th
Authors:
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JesslynJesslyn
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8 years ago
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NYC Author
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8 years ago
Good answer, thanks.
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