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Assume that a basket of goods and services costs the following amounts in three countries: U.S. $30,000 Australia 36,000 AUD Canada 45,000 CAD The costs
Assume that a basket of goods and services costs the following amounts in three countries: U.S. $30,000 Australia 36,000 AUD Canada 45,000 CAD The costs are given in terms of the currencies of each country. AUD stands for Australian dollars and CDN stands for Canadian dollars. Use the above information to calculate the following exchange rates, assuming that absolute PPP holds. E$/AUD E$/CAD ECAD/AUD b. Provide one explanation for why PPP may not hold in the short run
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