Price levels are defined as the cost of a representative basket of goods and services that people purchase in their lives. We know: Price level in the U.S. is $1000/basket. Price level in the UK is 900 /basket. Nominal exchange rate is 1.3 US dollars ($) per Pound (). (a) (2 point) Please solve for the real exchange rate between the two countries, assuming that the baskets of goods are identical everywhere. (b) (2 point) Does the real exchange rate you just solved for satisfy the purchasing power parity (PPP) theory? (c) (3 point) The PPP theory states that, under certain conditions, merchants will profit by cross-country trading. Assume there is zero barriers and costs to trading between the two countries. If you think merchants can profit from trading between the UK and US, please explicitly state how they will do so. If you don't think merchants can, please also explain why