According to the theory of purchasing power parity, if the price of ha
According to the theory of purchasing power parity, if the price of haircuts in the United States is lower than those in Mexico,
A) U.S. exports should increase.
B) there would be little effect in both currency and services markets.
C) the value of the peso should fall by a large amount.
D) the value of the dollar should rise by a large amount.
E) Mexican imports should rise.
ANSWER
B
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