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4. [Purchasing Power Parity] Data from The Economist BigMac index from January 2022 shows that the local price of a Big Mac in Canada is

4. [Purchasing Power Parity] Data from The Economist BigMac index from January 2022 shows that the local price of a Big Mac in Canada is 6.77 Canadian dollars (CAD) and the price of a Big Mac in Brazil is 22.90 Brazilian Reals (BRL). The exchange rates are reported as the local price of one US dollar (USD): XCAD/USD = 1.2718 and XBRL/USD = 5.31. (a) Calculate the Purchasing Power Parity Rate PPPRBRL/CAD. What does this rate measure? (b) Compute the exchange rate XBRU/CAD from the formula for the cross rate: XBRL/USD XBRL/CAD = XCAD/USD Calculate the Brazilian Real price of a BigMac in Canada and the Canadian dollar price of a BigMac in Brazil

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