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How can the difference between the implied price

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On average, the cost of a Big Mac in the U.S. is $5.30 (Jul 2017). If purchasing power parity holds, how much should the Big Mac cost in China if the exchange rate is $1 = RMB 6.512?

The actual average price of a Big Mac in China is 20 RMB. What dollar price is implied by PPP? How can the difference between the implied price and the actual price be explained?

Reference no: EM132783103

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