Using the following table containing exchange rates, answer the following question.

Currency:..........in US$.........per US$ UK Pound............1.5.............0.6777 Polish Zloty........ 0.20........... 5.000 Japanese Yen.....0.01............100.00

Suppose that today a Big Mac costs $3.00 in the U.S. and 2.0 Pounds in the UK. Using the exchange rates above, what conclusion can be reached with regard to purchasing power parity (PPP)?

PPP Holds

PPP does not hold, and Big Macs are relatively cheap in the UK

PPP does not hold, and Big Macs are relatively expensive in the UK

None of the Above