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A Big Mac costs A$5.90 in Australia and US$5.28 in the United States. What is the implied exchange rate? Explain the theory of exchange rate
A Big Mac costs A$5.90 in Australia and US$5.28 in the United States. What is the implied exchange rate?
Explain the theory of exchange rate determination underlying the construction of the Big Mac index.
If the actual exchange rate was 1.25A$/1U$ and this theory held, how would you expect the actual exchange rate to move going forward? Explain
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