1. Suppose the same goods always cost strictlymore in the U.S. than in Europe in their respectively local currency. That is, if a computer costs 1,000 euros in Europe, the same computer must cost more than 1,000 dollars in the U.S.

Assume the purchasing power parity theory is true. Which of the below are possiblevalues of dollar/euro exchange rates? (may choose multiple or none)

1. 1 dollar = 2 Euros
2. 1 dollar = 1.5 Euros
3. 1 dollar = 1 Euro
4. 1 dollar = 0.5 Euros (e) 1 dollar = 0.2 Euros