An MP3 player in Singapore costs 200 Singaporean dollars. In the U.S. it costs 1

Question

An MP3 player in Singapore costs 200 Singaporean dollars. In the U.S. it costs 100 US dollars. Which of the following is correct? a. if the nominal exchange rate is .50 Singaporean dollars per U.S. dollar, purchasing power parity holds. if the nominal exchange rate is 1 Singaporean dollars per U.S. dollar, purchasing power parity holds. if the nominal exchange rate is 2.0 Singaporean dollars per U.S. dollar, purchasing power parity holds. purchasing power parity does not hold at any of the above exchange rates.

Explanation / Answer

C. If the nominal exchange rate is 2,0 singaporean dollars per US dollar, purchasing power parity holds.

because, MP3 player having 200Singaporean dollar and in US it is 100 US dollars which means US dollar is twice more than Singaporean dollar.

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