What is the internal and external purchasing power

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Assume that EUR15,507 is the current price level in france, while CHF16797 is the current price level in Switzerland for an equivalent bundle of goods.

Problem 1:Given a spot exchange rate of EUR1.0403/CHF, what is the internal and external purchasing power of EUR1.0403/CHF, what is the internal and external purchasing power of EUR0.50 million? Is the Euro overvalued or undervalued relative to the Swiss Franc?

a/ 29.77 consumption bundles; 30.99 consumption bundles; overvalued
b/ 30.99 consumption bundle; 29.77 consumption bundles; overvalued
c/ 29.77 consumption bundles; 30.99 consumption bundles; undervalued
d/ 32.24 consumption bundles; 28.61 consumption bundles; undervalued
e/ 32.24 consumption bundles; 28.61 consumption bundles; overvalued

Reference no: EM132755394

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