Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Q2
Answer part b only

Transcribed Image Text:Part (b)
Once upon a time, a basket of hamburgers sells at A$15 in Australia. Across the ocean, Hong
Kong sells the same basket of burgers at price HK$85. What does the purchasing power parity
theory predict the nominal exchange rate to be?
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