Suppose purchasing power parity(PPP)depends only on hamburgers. The exchange rate isC$1.00 =US$0.80 and hamburger prices areC$2.00 in Canada andUS$1.50 in the U.S.PPP suggests that the

A. supply of Canadian dollars will decrease.

B. demand for Canadian dollars will increase.

C. Canadian dollar is overvalued.

D. supply of U.S. dollars will decrease.

E. Canadian dollar is undervalued.

Suppose purchasing power parity (PPP) depends only on hamburgers. The exchange rate isC$1.00 = US$0.80 and hamburger prices are C$2.00 in Canada and US$1.80 in the U.S. PPPsuggests that the

A) demand for Canadian dollars will decrease.

B) Canadian dollar is overvalued.

C) Canadian dollar is undervalued.

D) supply of Canadian dollars will increase.

E) supply of U.S. dollars will increase.