If a McDonald's Big Mac Cost $3

question 155

Multiple Choice

If a McDonald's Big Mac cost $3.06 in the United States and 3.21 euros in the Euro area, then purchasing-power parity implies the nominal exchange rate is how many euros per dollar?

• A)1.05 If the value is less than this, it costs more dollars to buy a Big Mac in the U.S. than in the Euro area.
• B)1.05 If the value is less than this, it costs fewer dollars to buy a Big Mac in the U.S. then in the Euro area.
• C).95 If the value is less than this, it costs more dollars to buy a Big Mac in the U.S. than in the Euro area.
• D).95 If the value is less than this, it costs fewer dollars to buy a Big Mac in the U.S. than in the Euro area.

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