Question

Suppose the Chinese yuan is pegged so that the exchange rate is 0.17 dollars per yuan. If an iPod costs $200 in the United States, how much would the same iPod cost in China if purchasing power parity holds?

Answer 1

Answer:

1176.47 Yuan

Explanation:

As we know that:

1 Yuan = $0.17 per Yuan

So this also means that:

One Dollar = 1  /   $0.17 Yuan = 5.8824 Yuan per Dollar

One Dollar = 5.8824 Yuan per Dollar

So for $200, Yuans would be:

200 Dollars = 5.8824 Yuan per Dollar   *  200

= 1176.47 Yuan