Multiple Choice
A Big Mac costs 4 Jon in the country of Jonanda, where Jon is the national currency, whereas in the country of Forunisa, where Fortan is the national currency, it costs 2.5 Fortan. If Fortan is the domestic currency, then the exchange rate is 1.60. Hence, if the exchange rate of Jon to Fortan is any greater, the Big Mac Index would state that:
A) the currency exchange rate is likely to decrease.
B) the Jon is overvalued.
C) the Fortan is overvalued.
D) the spot exchange rate is likely to decrease.
Correct Answer:
Verified
Correct Answer:
Verified
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