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Is the peso overvalued or undervalue

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Problem 1: In practice, people often use The Big Mac index, which provides an interesting perspective into the determination of foreign exchange rates; in Canada, a Big Mac is selling at C$6.06, while it costs P200.60 in the Philippines. The official exchange rate is C$1 = P36.94. If the purchasing power of parity (PPP) is considered, is the peso overvalued or undervalued? What will be your answer if Big Mac costs P225 in the Philippines?

Reference no: EM132772370

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