The table below shows hypothetical prices of a tall Starbucks latte in countries around the world. Using the data, and the fact that a latte costs $2 in the United States, calculate how much a country's currency is under- or overvalued according to purchasing power. First, calculate the implied exchange rate for each country. Next, calculate the "latte index" for each country using the Big Mac index formula from the chapter.

The table below shows hypothetical prices of a tall Starbucks latte in countries around the world. Using the data, and the fact that a atte costs $2 in the United States, calculate how much a country's currency is under- or overvalued according to purchasing power. First, calculate the implied exchange rate for each country. Next, calculate the "latte index" foreach country using the Big Mac index formula from the chapter. Instructions: Round your answers to two decimal places. Official exchange Implied exchange rate Country Price rate if PPP holds Cost of U.S. latte Thailand 50 baht 25 baht/dollar baht/dollar 8 Argentina 10 peso (s) 5 pesos /dollar pesos /dollar United Kingdom 1 pound ( s) 0. 6 pounds /dollar pounds / dollar Japan 400 yen 70 yen/dollar yen /dollar