If the implied exchange rate between Big Mac prices in the United States and the Philippines is 68 pesos per dollar,but the actual exchange rate between the United States and the Philippines is 43 pesos per dollar,which of the following would you expect to see?
A)a depreciation of the dollar
B)an increase in the demand for dollars.
C)a decrease in the demand for dollars
D)an appreciation of the Philippine pesos

Question

Quizplus · Accepted Answer

The actual exchange rate is lower than the implied rate, suggesting the dollar is undervalued. This would likely lead to an increase in demand for dollars as people seek to take advantage of the cheaper dollar.

If the Implied Exchange Rate Between Big Mac Prices in the United