Suppose a Big Mac sandwich sells for 2.50 US Dollars in the United States and for 400 Yens in Japan. Which nominal exchange rate is consistent with the Law of One Price? 120 yens for US$1. 160 yens for US$1. 160 yens for US$2.50. 120 yens for US$120.

Suppose a Big Mac sandwich sells for 2.50 US Dollars in the United States and for 400 Yens in Japan. Which nominal exchange rate is consistent with the Law of One Price? 120 yens for US$1. 160 yens for US$1. 160 yens for US$2.50. 120 yens for US$120.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter6: Managing In The Global Economy

Section: Chapter Questions

Problem 12E

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Question

please answer in text form and in proper format answer with must explanation , calculation for each part and steps clearly

Suppose a Big Mac sandwich sells for 2.50 US Dollars in the United States and for
400 Yens in Japan. Which nominal exchange rate is consistent with the Law of One
Price?
120 yens for US$1.
160 yens for US$1.
160 yens for US$2.50.
120 yens for US$120.

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