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Question 5 1 pts Suppose that if you purchase a big Mac in Coral Springs, FL in the US, it will cost you $3.95. On the other hand, if you purchase the same big Mac in Florianopolis in southern Brazil, it will cost you 18.85 Brazilian real. The current exchange rate is $1 US buys 5.60 real. In this case, according to the law of one price, the exchange rate should be that $1 US buys real, and hence, over time we predict that the US dollar should O 5.95; appreciate O 5.95; depreciate O 4.77; appreciate O 4.77; depreciate

Question 5 1 pts Suppose that if you purchase a big Mac in Coral Springs, FL in the US, it will cost you $3.95. On the other hand, if you purchase the same big Mac in Florianopolis in southern Brazil, it will cost you 18.85 Brazilian real. The current exchange rate is $1 US buys 5.60 real. In this case, according to the law of one price, the exchange rate should be that $1 US buys real, and hence, over time we predict that the US dollar should O 5.95; appreciate O 5.95; depreciate O 4.77; appreciate O 4.77; depreciate

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter31: Open-Economy Macroeconomics: Basic Concepts
Section31.2: The Price For International transaction: Real And Nominal Exchange Rate
Problem 2QQ
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Question 5 1 pts Suppose that if you purchase a big Mac in Coral Springs, FL in the US, it will cost you $3.95. On the other hand, if you purchase the same big Mac in Florianopolis in southern Brazil, it will cost you 18.85 Brazilian real. The current exchange rate is $1 US buys 5.60 real. In this case, according to the law of one price, the exchange rate should be that $1 US buys real, and hence, over time we predict that the US dollar should O 5.95; appreciate O 5.95; depreciate O 4.77; appreciate O 4.77; depreciate
Transcribed Image Text:Question 5 1 pts Suppose that if you purchase a big Mac in Coral Springs, FL in the US, it will cost you $3.95. On the other hand, if you purchase the same big Mac in Florianopolis in southern Brazil, it will cost you 18.85 Brazilian real. The current exchange rate is $1 US buys 5.60 real. In this case, according to the law of one price, the exchange rate should be that $1 US buys real, and hence, over time we predict that the US dollar should O 5.95; appreciate O 5.95; depreciate O 4.77; appreciate O 4.77; depreciate
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