Assume that the cost of a particular basket of goods is equal to $108 in the United States and f14,000 in Japan. a. What should the f/$ exchange rate be according to absolute purchasing power parity?...

Assume that the cost of a particular basket of goods is equal to $108 in the United States and f14,000 in Japan.

a. What should the f/$ exchange rate be according to absolute purchasing power parity?

b. If the actual exchange rate were equal to 120, would the dollar be considered undervalued or overvalued?