According to the Big Mac Index, the Implied PPP Exchange

question 35

Multiple Choice

According to the Big Mac Index, the implied PPP exchange rate is Mexican peso 8.50/$1 but the actual exchange rate is peso 10.80/$1. Thus, at current exchange rates the peso appears to be ________ by ________.

• A) overvalued; approximately 21%
• B) overvalued; approximately 27%
• C) undervalued; approximately 21%
• D) undervalued; approximately 27%

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Definitions:

Mexican Population

Refers to the demographic group of people living in Mexico, or of Mexican descent in other countries.

Autonomy

Autonomy is the right or condition of self-government, often within a larger political or organizational entity.

Jefferson Davis

An American politician who served as the President of the Confederate States from 1861 to 1865 during the American Civil War.

Liberty Cap

A soft, conical cap that was worn as a symbol of freedom and liberty during the American and French Revolutions.