The Actual Exchange Rate of the Real, Brazil's Currency, Is

question 64

Multiple Choice

The actual exchange rate of the real, Brazil's currency, is 2.40 real per U.S. dollar. According to the PPP estimation, the exchange rate should be 1.20 real per U.S. dollar. This implies that the real is:

• A)undervalued by 50 percent.
• B)overvalued by 50 percent.
• C)undervalued by 20 percent.
• D)overvalued by 20 percent.

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