Question
In The Economist's most recent version of its Big Mac Index, which refects prices as of December, 2020, the Brazilian real (BRL) was reported as
In The Economist's most recent version of its Big Mac Index, which refects prices as of December, 2020, the Brazilian real (BRL) was reported as being nearly 30% below the U.S. dollar on a relatve value basis.
a) Assuming this 30% undervaluation is correct, what is the real BRL/USD exchange rate implied by this Big Mac Index value?
b) Did the BRL appreciate or depreciate relative to the USD from the end of 2020 through to March 31, 2021? By what percentage?
c) What was the change in the real exchange rate during this three month period?
Step by Step Solution
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Step: 1
a The implied BRLUSD exchange rate based on the Big Mac Index Assuming a Big Mac costs 575 in the US ...
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International Business
Authors: Michael Geringer, Jeanne M. McNett, Michael S Minor, Donald A Ball
1st edition
78029376, 78029370, 1259317226, 978-1259317224
