Question
16. Big Mac costs $3.73 in the US and A$4.35 in Australia. Given that the actual exchange rate A$/U$ = 1.0122, calculate the implied PPP
16. Big Mac costs $3.73 in the US and A$4.35 in Australia. Given that the actual exchange rate A$/U$ = 1.0122, calculate the implied PPP rate and determine which currency is overvalued/undervalued. Indicate whether it costs more/less to for a US consumer (Australian) to buy Big Mac in Australia (US).
17. Big Mac costs $3.73 in the US and 7.05 Malaysian Ringgit (R) in Malaysia. Given that the actual exchange rate R/$ = 3.1011, calculate the implied PPP rate and determine which currency is overvalued/undervalued. Indicate whether it costs more/less for a US (Malaysian) consumer to buy Big Mac in Malaysia (US).
18. Big Mac costs $3.73 in the US and 320 Japanese Yen (Y) in Japan. Given that the actual exchange rate Y/$ = 81.5025, calculate the implied PPP rate and determine which currency is overvalued/undervalued. Indicate whether it costs more/less to for a US (Japanese) consumer to buy Big Mac in Japan (US).
19. Big Mac costs $3.73 in the US and 13.20 Chinese Yuan (Y) in China. Given that the actual exchange rate Y/$ = 6.6543, calculate the implied absolute PPP rate and determine which currency is overvalued/undervalued. Indicate whether it costs more/less for a US (Chinese) consumer to buy Big Mac in China (US).
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Economics For Financial Markets
Authors: Brian Kettell
1st Edition
0750653841, 978-0750653848
