ECO – 252 — Macroeconomics
8. If a McDonald’s Big Mac cost $3.10 in the U.S. and 3.30 euros in Spain, then what would the euro per dollar nominal exchange rate be if purchasing power parity (PPP) holds. Round up to the nearest cent. A cent is the euro equivalent of a penny.
If PPP does not hold and the actual nominal exchange rate if less than what you found above, does it cost more dollars or less dollars to buy a Big Mac in the U.S. than in Spain? *Show your work