a. Gold is $350 per ounce in the United States and 2,800 pesos per ounce in Mexico. What nominal exchange rate between U.S. dollars and Mexican pesos is implied by the PPP theory? (LO2)

b. Mexico experiences inflation so that the price of gold rises to 4,200 pesos per ounce. Gold remains $350 per ounce in the United States. According to the PPP theory, what happens to the exchange rate? What general principle does this example illustrate? (LO2)

c. Gold is $350 per ounce in the United States and 4,200 pesos per ounce in Mexico. Crude oil (excluding taxes and transportation costs) is $30 per barrel in the United States. According to the PPP theory, what should a barrel of crude oil cost in Mexico? (LO2)

d. Gold is $350 per ounce in the United States. The exchange rate between the United States and Canada is 0.70 U.S. dollars per Canadian dollar.
How much does an ounce of gold cost in Canada?
(LO2)