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Suppose That on Monday,a Big Mac Cost $3

Question 105

Multiple Choice

Suppose that on Monday,a Big Mac cost $3.00 in the United States and 310 Japanese yen in Japan.On Monday,the exchange rate was $1 = 85 yen.According to the purchasing power parity theory,the yen was __________ by approximately __________ percent.


A) overvalued; 22
B) undervalued; 40
C) overvalued; 29
D) undervalued; 22
E) overvalued; 18

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