Question
Example: Compare the purchasing power parity to the current exchange rate. Recall that for purchasing power parity to exist, the exchange rate and the purchasing
Example: Compare the purchasing power parity to the current exchange rate. Recall that for purchasing power parity to exist, the exchange rate and the purchasing power parity ratio must be equal.
Here's a simple example comparing the cost of living using only one product(prices were obtained using August 2017 figures):
The price of a Coke in Canada was $1.99 C.
The price of a Coke in Germany was ? 2.08.
The implied PPP was 2.08/1.99 = 1.05
The actual exchange rate was $1 = ? 0.67.
(1.05 - 0.67)/0.67 X 100 = 56.72% overvalued against the Canadian dollar.
Thus, the euro was overvalued against the Canadian dollar by approximately 57%.
help me do the same for the rest of this work in the image and show your work. also let me know if i did anything wrong in my work in the picture.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started