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The "Big Mac Theory of Exchange Rates" Tests the Accuracy

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The "Big Mac Theory of Exchange Rates" tests the accuracy of the purchasing power parity theory.In January 2017,the Economist reported that the average price of a Big Mac in the United States was $4.93.In Mexico,the average price of a Big Mac at that time was 49 pesos.If the exchange rate between the dollar and the peso was 13.60 pesos per dollar,explain how it would be profitable to buy Big Macs in Mexico instead of in the United States.


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Standard Automobiles

Refers to mass-produced cars that meet basic safety and performance standards.

Artwork

Visual art objects or pieces created by an artist, which can include paintings, sculptures, or illustrations.

High-value

Denoting items or activities that are of significant worth, importance, or benefit.

Low-value

Refers to products, services, or attributes perceived as offering minimal benefit or worth in comparison to their cost or significance.

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