Calculate the PPP implied exchange rate (i.e., local currency per dollar) between the local price of a Big Mac and the U.S. price of a Big Mac (hint: look/search in spreadsheet to find U.S. Big Mac price. Then use U.S. Big Mac price to compute the PPP implied exchange rate). a. What is the PPP implied exchange rate for the following countries (i.e., local currency per dollar)?: i. China: _____________________________________ ii. Canada: _____________________________________ iii. Indonesia: _____________________________________ iv. India: _____________________________________ v. Norway: _____________________________________ vi. Argentina: _____________________________________ vii. South Africa: _____________________________________ viii. Switzerland: _____________________________________ 2. Calculate the percentage change between the PPP implied exchange rate and the actual exchange rate. The actual exchange rate is labeled "dollar_ex (i.e., local/$)". (Hint: the PPP implied exchange minus the actual exchange rate. Express your answer in percent). b. What is the percentage change between the PPP implied exchange rate and the actual exchange rate for the following countries?: i. China: _____________________________________ ii. Canada: _____________________________________ iii. Indonesia: _____________________________________ iv. India: _____________________________________ v. Norway: _____________________________________ vi. Argentina: _____________________________________ vii. South Africa: _____________________________________ viii. Switzerland: _____________________________________ 3. Using your results from question#13, which of the following countries' currencies is overvalued or undervalued relative to the U.S. dollar: i. China: _____________________________________ ii. Canada: _____________________________________ iii. Indonesia: _____________________________________ iv. India: _____________________________________ v. Norway: _____________________________________ vi. Argentina: _____________________________________ vii. South Africa: _____________________________________ viii. Switzerland: _____________________________________

4. Select two countries from above and explain, using international economics theory and empirical evidence, why their currencies are overvalued or undervalued according to PPP/law of one price theory?

Data set:

Country iso_a3 currency_code local_price dollar_ex (i.e., local/$) United Arab Emirates ARE AED 17 3.67305 Argentina ARG ARS 450 105.0165 Australia AUS AUD 6.4 1.41934568164076 Azerbaijan AZE AZN 4.5 1.699 Bahrain BHR BHD 1.5 0.377 Brazil BRA BRL 22.9 5.31 Canada CAN CAD 6.77 1.2718 Switzerland CHE CHF 6.5 0.93105 Chile CHL CLP 3100 798.6 China CHN CNY 24.4 6.36535 Colombia COL COP 12950 3941.995 Costa Rica CRI CRC 2650 642.585 Czech Republic CZE CZK 89 21.6802 Denmark DNK DKK 32 6.6373 Egypt EGY EGP 42.5 15.71 Euro area EUZ EUR 4.42 0.892060660124889 Britain GBR GBP 3.59 0.7453508739239 Guatemala GTM GTQ 26 7.6898 Hong Kong HKG HKD 22 7.79755 Honduras HND HNL 89 24.61415 Croatia HRV HRK 23.67 6.715 Hungary HUN HUF 982 317.51115 Indonesia IDN IDR 34000 14382 India IND INR 190 74.6225 Israel ISR ILS 17 3.17775 Jordan JOR JOD 2.12 0.709 Japan JPN JPY 390 115.225 South Korea KOR KRW 4600 1205.5 Kuwait KWT KWD 1.25 0.3029Kuwait KWT KWD 1.25 0.3029 Lebanon LBN LBP 70000 21500 Sri Lanka LKA LKR 840 202.41 Moldova MDA MDL 52 18 Mexico MEX MXN 69 20.649 Malaysia MYS MYR 9.99 4.1855 Nicaragua NIC NIO 134 35.455 Norway NOR NOK 57 8.91605 New Zealand NZL NZD 7 1.52264940997335 Oman OMN OMR 1.15 0.385 Pakistan PAK PKR 590 176.52 Peru PER PEN 12.9 3.83735 Philippines PHL PHP 142 50.975 Poland POL PLN 14.08 4.094 Qatar QAT QAR 13 3.641 Romania ROU RON 10.6 4.4119 Russia RUS RUB 135 77.4175 Saudi Arabia SAU SAR 15 3.7519 Singapore SGP SGD 5.9 1.35215 Sweden SWE SEK 54 9.3341 Thailand THA THB 128 33.295 Turkey TUR TRY 24.99 13.4155 Taiwan TWN TWD 75 27.814Sweden SWE SEK 54 9.3341 Thailand THA THB 128 33.295 Turkey TUR TRY 24.99 13.4155 Taiwan TWN TWD 75 27.814 Ukraine UKR UAH 69 28.3673 Uruguay URY UYU 239 44.0355 United States USA USD 5.81 1 Venezuela VEN VES 23 4.5435 Vietnam VNM VND 69000 22650 South Africa ZAF ZAR 39.9 15.47