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Purchasing power parity predicts

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Suppose a Big Mac costs $5.00 in the United States and 25 Chinese yuan in China. If the exchange rate is 6.9 Chinese yuan per dollar, purchasing power parity predicts

A. the yuan is undervalued.

B. the dollar is undervalued.

C. the yuan is overvalued.

D. both the dollar and the yuan are undervalued.

Reference no: EM131325749

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