5. purchasing power parity the law of one price

S. Purchasing power parity The law of one price The theory of purchasing power party (PPP) states that in the long-run exchange rates between two countries adjusts so that the price of an identical pood is the same when expressed in the same currency A television sells for $889.35 in the United States. The exchange rate between the U.S. dollar and the Swiss franc (SR) is $0.0145 per Swiss franc Assuming that PPP holds true, how much does the same television cost in Switzerland? SFr 1,091.90 SF 1,146.50 SR 1,201.09 SF 1,364.08 Suppose the price of the television in Switzertand was actually sFr 873.57. Assuming no transaction costi, transportation conuts, or import restrictions, PPP predicts that the demand would in Switzerland