What is the exchange rate compatible

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Reference no: EM131101278

The price of a commodity in New Zealand is NZD10, whereas the price of the same commodity in Australia is AUD6. The current exchange rate (NZD/AUD) is 1.15. (a) Is there violation of LOP? (b) If so, what will happen? (c) What is the Australian dollar price compatible with the LOP at the current exchange rate? (d) at the current Australian dollar price, what is the exchange rate compatible with the LOP?

Reference no: EM131101278

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