Question
2. The price of a Big Mac in the U.S. is $4.79, the price of a Big Mac in South Korea is 4,100 Won, and
2. The price of a Big Mac in the U.S. is $4.79, the price of a Big Mac in South Korea is 4,100 Won, and the market nominal exchange rate is e = 1084.65 Won/$. The implied ePPP is equal to ___(1)___, the actual real exchange rate () is equal to _____(2)_____, and the dollar is ________(3)_______ (undervalued/overvalued) relative to the Won.
Show your calculation for (1) ePPP and (2) . How do you interpret the numerical value of ?
4. What is the percentage of under/over-valuation of the dollar? . [15 points]
Just need the answer to 4
answers to 1-3 are ePPP=855.95 won/$ =0.789 the dollar is overvalued in relation to the won
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