Determine purchasing power parity

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If the average price of goods in Europe increase from 100 in year 2000 to 130 in year 2010. If the average price of goods in the U.S. rises from 120 in year 2000 to 140 in year 2010. If the exchange rate in 2000 was 1 euro per dollar. If purchasing power parity held in 2000, what would purchasing power parity predict for the exchange rate in 2010?

Reference no: EM1367510

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