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QUESTION 1 Assume that a Big Mac burger costs $3.57 in Australia and 7.80 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, purchasing power parity predicts that the dollar: is currently underrvalued and will depreciate in the long run. is currently overvalued and will appreciate in the long run. is currently overvalued and will depreciate in the long run. is currently undervalued and will appreciate in the long run. is neither undervalued nor overvalued. QUESTION 2 Which of the following is a reason why a country may manipulate its currency such as to maintain an artificially low exchange rate? To deter foreign businesses from expanding operations to the domestic country. To give its domestic producers an advantage by making their products cheaper than those from other countries. To keep import prices low for domestic consumers. To decrease the domestic interest rate and therefore attract foreign funds. To increase the domestic interest rate and therefore attract foreign funds