Suppose the dollar/franc exchange rate equals $0.50 per franc. According to the purchasing-power- parity theory, what will

Question:

Suppose the dollar/franc equals $0.50 per franc. According to the purchasing-power- parity theory, what will happen to the dollar’s exchange value under each of the following circumstances?
a. The U.S. price level increases by 10 percent and the price level in Switzerland stays constant.
b. The U.S. price level increases by 10 percent and the price level in Switzerland increases by 20 percent.
c. The U.S. price level decreases by 10 percent and the price level in Switzerland increases by 5 percent.
d. The U.S. price level decreases by 10 percent and the price level in Switzerland decreases by 15 percent.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...