The implied PPP rate of exchange of Mexican Pesos per U.S. dollar is 8.50 according to the Big Mac Index. The current exchange rate is Peso 10.8/$1. Thus, according to PPP and the Law of One Price, at the current exchange rate the peso is ________.
A) overvalued
B) undervalued
C) correctly valued
D) not enough information to answer this question
Correct Answer:
Verified
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