Question
. Multiple Choice WITH explanation. [10 points] Choose the one alternative that bestcompletesthe statement andexplain your reasoning. Do not forget to include equations, graphs, or
. Multiple Choice WITH explanation. [10 points]
Choose the one alternative that bestcompletesthe statement andexplain your reasoning. Do not forget to include equations, graphs, or any other material to support your choice (answer).No credits without explanation.
If the price of a BigMac in the United States is $5.74U.S. dollarsand the price of a BigMac in Canada is $6.54U.S. dollars,then the Canadian dollar would have to ______________ against the U.S. dollar to attain the level implied by the law of one price.
a) appreciate
b) depreciate
c) appreciate and then depreciate
d) remain unchanged
Do not forget to define the law of one price and to include its equation to support your answer. Describe the intuition behind your choice.
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