QUESTION 4

A Big Mac in Sri Lanka cost 210 Rupee while the same Big Mac in the United States cost USD3.57. The actual spot exchange rate is 107.55 Rupee/USD. Then, (i) the price of a Big Mac in Sri Lanka in USD terms, (ii) the implied PPP rate of exchange , and (iii) the degree to which the Rupee is undervalued/overvalued in % :

		$1.95, (ii) $58.82, (iii) -98.18% (undervalued)
		Rupee 1.95, (ii) Rupee 58.82, (iii) -45.3% (undervalued)
		$1.95, (ii) $58.82, (iii) -45.3% (undervalued)
		Rupee 58.82, (ii) Rupee 1.95, (iii) 45.3% (overvalued)