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6 years ago
A Big Mac costs $4 in the United States and 3 euros in Portugal. If the actual exchange rate is 1 euro = $1.33, we can conclude that in this case
A) the law of one price holds and the numbers are consistent with the theory of purchasing power parity.
B) the law of one price does not hold and the numbers are not consistent with the theory of purchasing power parity.
C) the law of one price holds but the numbers are not consistent with the theory of purchasing power parity.
D) the law of one price does not hold but the numbers are consistent with the theory of purchasing power parity.
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Money, Banking, and the Financial System

Money, Banking, and the Financial System


Edition: 3rd
Authors:
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