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A Big Mac costs $5.67 in the United States and 3.39 pound in the United Kingdom. One U.S. dollar buys 0.77 pound. a) Compute the

A Big Mac costs $5.67 in the United States and 3.39 pound in the United Kingdom. One U.S. dollar buys 0.77 pound.

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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