The Economist magazine tracks the prices of the McDonalds Big Mac hamburger in countries around the world.
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The Economist magazine tracks the prices of the McDonald’s Big Mac hamburger in countries around the world. The following table shows the price of Big Macs in the United States and in five other countries, along with the exchange rate between that country’s currency and the U.S.
dollar.
a. Explain whether the statistics in the table are consistent with the theory of purchasing power parity.
b. If the purchasing power parity theory allowed us to exactly determine exchange rates in the short run, what would be the exchange rate between the Brazilian real and the Israeli shekel?
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Related Book For 
Money Banking And The Financial System International Edition
ISBN: 978-1292000183
2nd Edition
Authors: R. Glenn Hubbard ,Anthony P Obrien
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