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The following refers to questions 1.6 Calculate the dollar price of a Big Mac (column 2), the implied PPP of the dollar (cplumn 3) and
The following refers to questions 1.6 Calculate the dollar price of a Big Mac (column 2), the implied PPP of the dollar (cplumn 3) and the local currency under () /over ( + ) valuation (column 5) for a Big Mac in Britain and Mexico. (For Britain, please note that for the pound and for the euro, exchange rates are quoted as dollars per foreign currency. For Mexico, as for all the other currencies, exchange rates are quoted as foreign currency per dollar). (Hint: Refer to Slide"19 in International Parity Conditions for a sample Big Mac table) The dollar price of Big Mac in Britain is: (3 pts) $3.15 $2.60 $2.85 $4.15 $2.36 $2.15 $3.36 $1.50 stion 3 lied PPP (o) $1.28/ $2.45/ $1.85/ $3.21/E Implied PPP (of the peso) is: (3 pts) MXP10.75/$ MXP 8.30/\$ MXP 9.40\$ MXP 8.62/\$ Question 5 (Mandatory) (4 points) Saved Is pound overvalued or undervalued? By what percentage? (4 pts) 13.2% - overvalued 11.7% - overvalued 13.2%-undervalued 11.7% - undervalued Is peso overvalued or undervalued? By what percentage? (4 pts) 7.2% - overvalued 6.7% - overvalued 7.2%-undervalued 6.7% - undervalued
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