The Big Mac Index is a numerical tool for assessing disparities in

consumer purchasing power between countries. Suppose that the Big Mac costs 7.50 Canadian dollars in Canada and 5.50 US dollars in the US. Suppose that the nominal exchange rate is 1.2 Canadian dollars to 1 US dollar.
(i) Calculate the real exchange rate.
(ii) Is the Canadian dollar undervalued or overvalued against the US dollar? Explain

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