Consider the following statements regarding the Rupee Dollar exchange rate in the light of purchasing power parity PPP:

  1. Exchange rate of the currencies should be equal to the ratio of price levels in two countries
  2. Exchange rate of the currencies should be not equal to the ratio of price levels in the two countries
  3. Exchange rate of the currencies should be decided on the basis of value of the third major currency like euro

which among the above statements are correct ?

[A] 1 & 3 only correct
[B] 2 & 3 only correct
[C] 3 only is correct
[D] 1 only is correct

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