Mock exam morning session Mary Marconi Scenario Exhibit 1 Normally in foreign currency context x:y = y/x So ratio of US price level/ UK price level is 1.5:1 means 1/1.5. However, answer key for question 20 interpret this in other way around?
US price level/ UK price level is 1.5:1 means US Price level is 1.5 compared to UK’s price level of 1. If it costs to $1.5 to purchase a burger, the same burger would cost 1 pound in UK.