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A Samsung Galaxy S22 Ultra costs 1200 in France. The same phone costs $1400 in the United States. The spot dollar-euro exchange rate is E
A Samsung Galaxy S22 Ultra costs 1200 in France. The same phone costs $1400 in the United States. The spot dollar-euro exchange rate is E$/ = $1.10. (To simplify things, we are not including transaction costs.)
- Calculate the real exchange rate using the prices given and the LOOP.
- Do the prices for the phone suggest that the dollar under or overvalued in the spot market?
- If so, by how much? Report the under or overvaluation as a percentage to one decimal place.
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