Question
Countries for following questions below are Egypt & Japan need help please provide formulas as well so I can get more practice thank you! Purchase
Countries for following questions below are Egypt & Japan need help please provide formulas as well so I can get more practice thank you!
Purchase Power Parity.
1. Find Big Mac Price (or gold price, or any basket of goods) of US and your country in year 2021. What is the inferred exchange rate from the price difference?
2. Compare the above implied exchange rate and real market exchange rate to check whether purchase power parity holds. If not, what is the difference?
3. Find the inflation rates of US and your country in year 2021 and make comparison.
4. Use above information and exchange rate from project question 1 to test whether relative PPP holds.
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