The following table shows PPP exchange rates (the price of 1 U.S. dollar in units of the foreign currency) for several countries, determined based on the Big Mac index.

PPP Exchange Rate (US$=)

U.S. US$ ------

Argentina Peso 3.75

Australia $ 1.17

Brazilian Real 2.33

British Pound 0.61

Canada $ 1.12

Chile Peso 469

China Yuan 3.54

a. According to this data, what are the predicted exchange rates for the following countries

i. Argentina and Australia

ii. Brazil and Canada

iii. Chile and China

iiii. China and Canada

b. Suppose that the Canadian dollar buys more silver in Australia than it buys in Mexico. What does purchasing power parity imply should happen?