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The price of a BMW is $33000 in the United States and 28000 in Germany. a) Where would you buy? Why? b) What is the

The price of a BMW is $33000 in the United States and 28000 in Germany.

a) Where would you buy? Why?

b) What is the nominal exchange rate (/$) implied by economic theory? At this exchange rate, where would you buy?

c) The actual nominal exchange rate is 0.93/$. Is there any arbitrage opportunity? Where would you buy? Why?

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