1. A manager is earning $150,000 in the US and gets a job offer in Germany paying 120,000 . The current exchange rate is $1.30 per pound and PPP based exchange rate is $1.20 per pound. Would she experience an increase or a decrease in standard of living if she switches jobs? Assume the income is spent entirely in the country where it was earned.

A. Increase

B. Decrease

2. The GDP for Japan in 2019 was US $ 5 trillion based on market exchange rate and US $ 5.5 based on PPP based exchange rate. In that year Japanese yen will be:

A. Undervalued relative to the US dollar based on the PPP criterion.

B. Overvalued relative to the US dollar based on the PPP criterion.

3. The Mexican pesoU.S. dollar exchange rate is 19 p/$. The price of a hotel room in Mexico City is 1,200 pesos. What is the dollar cost of the room for a visitor from US?

A. Less than $60

B. Greater than $60