Problem 3. (20 points) Absolute PPP. Suppose the price of consumer basket in the US is $100, while the price of the consumer basket in Switzerland is SF101. Suppose the exchange rate is E$/ SF= 1.1 . 1. Does the purchasing power parity hold? 2. Find the real exchange rate. Is dollar overvalued or undervalued against the Swiss Franc? 3. Find the exchange rate under which the PPP is satisfied..