Given these facts:

• The Nominal Spot exchange rate (that is, the rate found on online forex sites) is EURUSD 0.9999 (Do not look up the rate. Just use this rate for the purpose of the Question.)
• A Starbucks Pumpkin Spice triple shot latte is selling in Berlin for EUR10 and in New York for USD7

According to PPP theory, is the EUR overvalued or undervalued, relative to the USD?

Group of answer choices

Overvalued

Undervalued

None of the above. The valuation of each currency is in equilibrium to each other.'

Refer to the above Question.

By what percentage?

Group of answer choices

0%. There is no overvaluation or undervaluation.

30%

43%

70%