The Economist publishes annually the hamburger standard by which they compare the prices of the McDonalds ig Mac hamburger around the world. The price of the Big Mac hamburger in the US is $ 5.81 in October 2022 Country Big Mac Price in local currency(October 2022) Actual Exchange rate in terms of USD (USD/Foreign currency) (October 2022) Switzerland SWF 6.50 1.06 Australia AU$ 7.15 0.72 Mexico Pesos 69 0.048 Malaysia Malaysian Ringgit 10.40 0.24

a-Use the Table above to calculate the implied exchange rate for the currencies of Switzerland, Australia,Mexico and Malaysia.

b- Calculate the overvaluation or undervaluation in these currencies? Comment your answer.

c- How close does the Big Mac Index conform to the theoretical requirements for the measurement of purchasing power parity(PPP)? d- In your opinion which good can serve as a better measurement of PPP?

\begin{tabular}{|l|l|l|} \hline Country & Big Mac Price in local currency(October 2022) & Actual Exchange rate in terms of USD (USD/Foreign currency) (October 2022) \\ \hline Switzerland & SWF 6.50 & 1.06 \\ \hline Australia & AU\$ 7.15 & 0.72 \\ \hline Mexico & Pesos 69 & 0.048 \\ \hline Malaysia & Malaysian Ringgit 10.40 & 0.24 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline Country & Big Mac Price in local currency(October 2022) & Actual Exchange rate in terms of USD (USD/Foreign currency) (October 2022) \\ \hline Switzerland & SWF 6.50 & 1.06 \\ \hline Australia & AU\$ 7.15 & 0.72 \\ \hline Mexico & Pesos 69 & 0.048 \\ \hline Malaysia & Malaysian Ringgit 10.40 & 0.24 \\ \hline \end{tabular}