Question
Suppose that the U.S. dollar price of a Big Mac is $3.57 and the price of a Big Mac in Norway is 25 kroner. What
Suppose that the U.S. dollar price of a Big Mac is $3.57 and the price of a Big Mac in Norway is 25 kroner. What is the PPP rate for dollar in terms of kroner? If the current rate is 5 krone per dollar, is U.S. dollar overvalued/undervalued in PPP terms? State the overvaluation/undervaluation in percentage terms.
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Finance And Financial Markets
Authors: Keith Pilbeam
3rd Edition
023023321X, 978-0230233218
