Answer to Question #3290 in Macroeconomics for John Mckinley

Question #3290

If a Big Mac is 2 dollars in the United States and 4.5 pounds in Great Britain what is the exchange rate (pounds to dollars) according to PPP?

Expert's answer

The implied purchasing power parity is £2.25 to $1, that is £4.5/ $2 = 2.25

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