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Starbucks opened its first store in​ Zagreb, Croatia, in October 2010. In​ Zagreb, the price of a tall

vanilla latte is 25.66

25.66 Croatian kunas​ (kn or​ HRK). In New York​ City, the price of a tall vanilla latte is ​$2.67

2.67. The exchange rate between Croatian kunas and U.S. dollars is kn 5.6288 equals $ 1

kn5.6288=$1. According to purchasing power​ parity, is the Croatian kuna overvalued or​ undervalued?

The percentage of overvaluation or undervaluation is


​%. ​ (Round to two decimal​ places.)

Top Answer

According to purchasing power parity, the exchange rate is based on equity of prices. The... View the full answer

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