If the Implied Exchange Rate Between Big Mac Prices in Canada

question 160

Multiple Choice

If the implied exchange rate between Big Mac prices in Canada and the Philippines is 68 pesos per Canadian dollar, but the actual exchange rate between Canada and the Philippines is 43 pesos per Canadian dollar, which of the following would you expect to see?

• A)a depreciation of the Canadian dollar
• B)a decrease in the demand for Philippine pesos
• C)a decrease in the demand for Canadian dollars
• D)an appreciation of the Philippine pesos
• E)an increase in the demand for both Philippine pesos and Canadian dollars

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