00:01
So we are going to do a quick analysis here, given the information as follows, that there is the current rate.
00:11
So the current rate is 1 is to 1 us dollar.
00:17
One us dollar is to 0 .58 pounds.
00:24
Okay, so let's just put the signal day of a pound.
00:27
So that's 0 .58.
00:32
Now obviously given the information that the price level we are maintaining the price level that purchasing power parity that the using the current using the existing exchange rate the price that you would find for a piece of commodity in the united states would be the same as you would find in england now what happens when the price increases by 19 % in england and what happens when the price falls by 6 % in the united states.
01:10
So the first thing to look at is just to get an example of a product that costs 100 pounds.
01:16
What it means is if it costs 100 pounds, therefore because of the increase in the price levels, it's now going to cost 19 % more than it originally cost.
01:29
So that's 119 would be the new prices.
01:34
But at that price, how much would you have that in the us, in united states dollars? you would have that united states dollars as 172 united states dollars...