11) Assume you can purchase A Big Mac in the US for $5.36 and a...
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11) Assume you can purchase A Big Mac in the US for $5.36 and a Big Mac in China for 9.90 Yuan and the actual exchange rate for the Chinese Yuan is 7.74 per US dollar. According to Purchasing Power Parity, calculate: a) What do we expect to pay? b) What is the price in dollars? c) What should the exchange be? (This is the IPPP) d) What percentage is the DKK under or overvalued against the dollar? relation to the DKK? e) What percentage is the dollar undervalued or overvalued -3
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