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Suppose that the U.S. dollar price of a Big Mac is $3.57. The price of a Big Mac in Norway is 17.85 kroner. Suppose that

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Suppose that the U.S. dollar price of a Big Mac is $3.57. The price of a Big Mac in Norway is 17.85 kroner. Suppose that the current exchange rate is 6.00 krone per dollar. If absolute PPP holds, the PPP-implied exchange rate is and Norwegian krone is 5.00 krone per dollar; overvalued. 5.00 krone per dollar; undervalued. 7.00 krone per dollar; overvalued. 7.00 krone per dollar; undervalued

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