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Problem
2) Refer to figure above. If the Chinese government wants to peg its currency to the dollar to make Chinese exports cheaper to the United States, should they choose an exchange rate of greater than $.13/yuan, less than $.13/yuan, or equal to $.13/yuan?
3) Refer to figure above. Are U.S imports into China cheaper at exchange rates greater than $.13/yuan or less than $.13/yuan?
4) A Big Mac sells for $4.56 in the U.S., and sells for 28.5 kroner in Denmark. The actual exchange rate is 5.82 kroner/dollar.
a) What is the implied exchange rate?b) Is the U.S. dollar overvalued or undervalued vs. the kroner?
Attachment:- Graph.rar
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