from the base price level of 100 in 1979, saudi arabian and u.s. price levels in 2008 stood at 200 and 410, respectively . if the 1979 $/riyal exchange rate was $0.26/riyal what should the exchange rate be in 2008? suggestion: use purchasing power parity adjust the exchange rate to compensate for inflation. that is,determine the relative rate between the U.S and saudi arabia and multiply this times $/riyal of 0.26