If a Big Mac costs $2.31 in the United States, and in Japan 250 yen, according to PPP, what is the implied exchange rate in yen/$US?
A)0.00924
B)108.22500
C)119.79500
D)250.00000

Question

Quizplus · Accepted Answer

1 US dollar = 108.225 Japanese yen
This is calculated by dividing the price of the Big Mac in yen by the price in dollars (250 yen / $2.31) which equals 108.225. This represents the implied exchange rate based on PPP.

If a Big Mac Costs $2