Please ANSWER ALL the questions Not one of them !!!
1. A basket of goods costs $8,500 in the U.S. Exact same goods basket costs €7,200 in Europe. The exchange rate is €.8144/$.
A. What is the over/undervaluation of the €?
B. What is the over/undervaluation of the $?
2. Regarding Q1, how much cheaper/more expensive is the European basket (in dollars) than the dollar cost of the U.S. basket? (in percentage terms)
3. Regarding Q1, how much cheaper/more expensive is the U.S. basket than the European basket? (in percentage terms)