The following regression analysis was conducted for the inflation rate information and exchange rate of the Canadian dollar: [(1 + lus) 1 + (1+ Ic) ecs = ao + a1 where u is the error term, ecs is the percentage change of the value of Canadian dollars. Then For purchasing power parity to hold, ao = 0 and a1 = 1. %D For purchasing power parity to hold, ao = 1 and a1 = 1. For purchasing power parity to hold, ao = 0 and a1 = 0. %3D For purchasing power parity to hold, ao = 1 and a1 = 0