Consider Figure 20.5 below, which shows the nominal exchange rate (EXR) and the purchasing power parity real exchange rate (RER) between the Mexican peso and the U.S. dollar, index for pesos per dollar. During which period is the Mexican peso over- or undervalued? Explain.
Figure 20.5: Euro and U.S. Bond Yields

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The Answer of Consider Figure 20.5 below, which shows the nominal exchange rate (EXR) and the purchasing power parity real exchange rate (RER) between the Mexican peso and the U.S. dollar, index for pesos per dollar. During which period is the Mexican peso over- or undervalued? Explain.
Figure 20.5: Euro and U.S. Bond Yields