Question: A Big Mac costs $ 4 . 0 0 in the United States and 7 . 0 0 Euros in Germany. If the exchange rate

A Big Mac costs $4.00 in the United States and 7.00 Euros in Germany. If the exchange rate is $1=2, then purchasing power parity predicts the U.S. dollar is [ Select ]["undervalued", "overvalued"]. In the long-run, the demand for U.S. dollars will [ Select ]["increase", "remain unchanged", "decrease"] and the value of the U.S. dollar will [ Select ]["depreciate", "appreciate", "remain unchanged"].

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