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A Big Mac costs $5.67 in the United States and 3.39 in the United Kingdom. One U.S. dollar buys 0.77. (a) Compute the Big Mac
A Big Mac costs $5.67 in the United States and 3.39 in the United Kingdom. One U.S. dollar buys 0.77.
(a) Compute the Big Mac PPP-predicted exchange rate.
(b) Based on your answer above, is the British pound undervalued or overvalued relative to the U.S. dollar? By how much?
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