Multiple Choice
Suppose a McDonalds Big Mac cost $4.00 in the United States and 3.20 euros in the euro area and 5.20 Australian dollars in Australia.If exchange rates are .75 euros per dollar and 1.3 Australian dollars per dollar,where does purchasing power parity hold according to the Big Mac index?
A) Both the euro area and Australia.
B) Neither the euro area or Australia.
C) The eruo area but not Australia.
D) Australia but not the euro area.
Correct Answer:
Verified
Correct Answer:
Verified
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