In recent years, the U.S. and Chinese governments have been at odds about the appropriate value of
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Big Macs sell for widely different prices around the globe, as measured in dollars compared to the $3.58 price in the United States in March 2010. They are a bargain in China at $1.83, but very expensive in Switzerland at $6.16. Table also contains the market-exchange rate predicted by the theory of purchasing power parity. To obtain this exchange rate, divide the price of Big Macs in the foreign country by the dollar price. For example, for China the purchasing power exchange rate is
12.50 Chinese yuan (the price of a Big Mac in China)
$3.58 (the price of a Big Mac in the United States)
= 3.49 Chinese yuan per U.S.dollar
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Related Book For
Macroeconomics Principles Applications And Tools
ISBN: 9780134089034
7th Edition
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
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