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IUII'II II 18. Suppose the average price of a Big Mac in the United States is $3.50 while in Japan the average price is 400

IUII'II II 18. Suppose the average price of a Big Mac in the United States is $3.50 while in Japan the average price is 400 yen. If the price of a dollar is 100 yen per dollar, the purchasing power parity model of exchange rate determination suggests: a. The yen is overvalued. b. The yen is undervalued. c. The price of a Big Mac in Japan will rise. d. The dollar will depreciate against the yen. ANSWER: A

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