Study Guide: Final

3. Suppose the average price of a Big Mac in the United States is $3.50 while in Japan the average price is 400 yen. If the price of a dollar is 100 yen per dollar, the purchasing power parity model of exchange rate determination suggests: A. The yen is overvalued. B. The yen is undervalued. C. The price of a Big Mac in Japan will rise. D. ................
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