16. Big Mac costs $3.73 in the US and A$4.35 in Australia. Given that the actual...
16. Big Mac costs $3.73 in the US and A$4.35 in Australia. Given that the actual exchange rate A$/U$ = 1.0122, calculate the implied PPP rate and determine which currency is overvalued/undervalued. Indicate whether it costs more/less to for a US consumer (Australian) to buy Big Mac in Australia (US).
17. Big Mac costs $3.73 in the US and 7.05 Malaysian Ringgit (R) in Malaysia. Given that the actual exchange rate R/$ = 3.1011, calculate the implied PPP rate and determine which currency is overvalued/undervalued. Indicate whether it costs more/less for a US (Malaysian) consumer to buy Big Mac in Malaysia (US).
18. Big Mac costs $3.73 in the US and 320 Japanese Yen (Y) in Japan. Given that the actual exchange rate Y/$ = 81.5025, calculate the implied PPP rate and determine which currency is overvalued/undervalued. Indicate whether it costs more/less to for a US (Japanese) consumer to buy Big Mac in Japan (US).
19. Big Mac costs $3.73 in the US and 13.20 Chinese Yuan (Y) in China. Given that the actual exchange rate Y/$ = 6.6543, calculate the implied absolute PPP rate and determine which currency is overvalued/undervalued. Indicate whether it costs more/less for a US (Chinese) consumer to buy Big Mac in China (US).
Homework Answers
Add Answer to:
16. Big Mac costs $3.73 in the US and A$4.35 in Australia. Given
that the actual...
1) Assume that a Big Mac costs $3.06 in the U.S. and £1.85 in the U.K....
1) Assume that a Big Mac costs $3.06 in the U.S. and £1.85 in the U.K. Calculate the implied absolute PPP exchange rate $/£. If the actual exchange rate turns out to be $/£ = 1.8519 then show whether the British Pound is overvalued or undervalued relative to the dollar and whether it costs more or less in dollars (pounds) to buy Big Mac in the U.K. (U.S.) 2) Assume that a Big Mac costs $3.25 in the U.S. and...
Assume that the Big Mac is selling for $4.93 in the United States. In the table below, fill in the implied exchange rat...
Assume that the Big Mac is selling for $4.93 in the United States. In the table below, fill in the implied exchange rate and then state whether the currency is overvalued or undervalued versus the U.S. dollar. (Enter your responses rounded to two decimal places.) Implied Exchange Rate Actual Exchange Rate Country Big Mac Price Overvalued or Undervalued Chile 2,100 pesos 715.22 pesos/$ pesos/$ shekels/$ Israel 16.9 shekels 3.94 shekels/S Russia 114 rubles 74.66 rubles/S rubles/$ NZS/$ New Zealand 5.9...
In July 2018, a Big Mac costs 11,900 pesos in Colombia and US$5.51 in the United...
In July 2018, a Big Mac costs 11,900 pesos in Colombia and US$5.51 in the United States. What is the implied exchange rate if PPP holds?
a As mentioned in class, the Big Mac Index is a numerical tool for assessing disparities...
a As mentioned in class, the Big Mac Index is a numerical tool for assessing disparities in consumer purchasing power between countries. Suppose that the Big Mac costs 7.50 Canadian dollars in Canada and 5.50 US dollars in the US. Suppose that the nominal exchange rate is 1.2 Canadian dollars to 1 US dollar. (i) Calculate the real exchange rate. (ii) Is the Canadian dollar undervalued or overvalued against the US dollar? Explain.
A Big Mac costs €3.0 in Europe , while it costs $4.0 in the U.S. The...
A Big Mac costs €3.0 in Europe , while it costs $4.0 in the U.S. The actual market exchange rate is S($/€)=1.25. Then a. real (effective) exchange rate implied by the Big Mac is 1.07 and the euro is over-valued by 7%. b. real (effective) exchange rate implied by the Big Mac is 0.94 and the euro is under-valued by 6%. c. real (effective) exchange rate implied by the Big Mac is 1 and the euro is at parity. d....
A Big Mac costs $4.56 in the United States and 9.2 zlotys in Poland. If the...
A Big Mac costs $4.56 in the United States and 9.2 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, purchasing power parity predicts that both the zloty and dollar are undervalued. the dollar is undervalued. the dollar is overvalued. the zloty is overvalued.
A Big Mac costs SEK 52 in Sweden and 4.08 euros in France. Figure out the Big Mac Index and find the actual exchange rat...
A Big Mac costs SEK 52 in Sweden and 4.08 euros in France. Figure out the Big Mac Index and find the actual exchange rate on the internet or in other sources. Is the krona over- or undervalued against the euro?
1. In July 2019, the price of a Big Mac in Great Britain was 3.29 pounds....
1. In July 2019, the price of a Big Mac in Great Britain was 3.29 pounds. The exchange rate between the British pound and US dollar was 0.80 pounds/dollar. a. What would be the cost of a Big Mac in Great Britain in US dollars (convert the price in British pounds to US dollars)? b. The current cost of a Big Mac in the US is $5.74. If the law of one price holds for the Big Mac in the...
If a Big Mac is selling in the United States for $3.65, what is the implied exchange rate between each of the currencie...
If a Big Mac is selling in the United States for $3.65, what is the implied exchange rate between each of the currencies in the table? (Enter your responses rounded to two decimal places.) Country Brazil Poland South Korea Czech Republic Big Mac Price 7.60 reais 7.20 zlotys 3,250 won 67.10 korunas Implied Exchange Rate 2.08 reais per dollar 1.97 zlotys per dollar 890.41 won per dollar 18.38 korunas per dollar Actual Exchange Rate 1.58 reais per dollar 2.03 zlotys...
Problem 4 The Economist magazine uses the price of Big Macs in different countries to calculate...
Problem 4 The Economist magazine uses the price of Big Macs in different countries to calculate PPP (or LOOP) exchange rates. It is called the Big Mac Index. The following data are from the January 2018 copy of the Economist. I Big Mac Price (local currency) USD 5.28 Country United States Australia New Zealan AUD 5.90 NZD 6.2 Calculate the implied LOOP values for the US-Australian dollar exchange rate and the NZ-Australian dollar exchange rate. . Answer: On January 30,...
Assume that the Big Mac is selling for $4.93 in the United States. In the table below, fill in the implied exchange rate and then state whether the currency is overvalued or undervalued versus the U.S. dollar. (Enter your responses rounded to two decimal places.) Implied Exchange Rate Actual Exchange Rate Country Big Mac Price Overvalued or Undervalued Chile 2,100 pesos 715.22 pesos/$ pesos/$ shekels/$ Israel 16.9 shekels 3.94 shekels/S Russia 114 rubles 74.66 rubles/S rubles/$ NZS/$ New Zealand 5.9...
A Big Mac costs $4.56 in the United States and 9.2 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, purchasing power parity predicts that both the zloty and dollar are undervalued. the dollar is undervalued. the dollar is overvalued. the zloty is overvalued.
If a Big Mac is selling in the United States for $3.65, what is the implied exchange rate between each of the currencies in the table? (Enter your responses rounded to two decimal places.) Country Brazil Poland South Korea Czech Republic Big Mac Price 7.60 reais 7.20 zlotys 3,250 won 67.10 korunas Implied Exchange Rate 2.08 reais per dollar 1.97 zlotys per dollar 890.41 won per dollar 18.38 korunas per dollar Actual Exchange Rate 1.58 reais per dollar 2.03 zlotys...
Problem 4 The Economist magazine uses the price of Big Macs in different countries to calculate PPP (or LOOP) exchange rates. It is called the Big Mac Index. The following data are from the January 2018 copy of the Economist. I Big Mac Price (local currency) USD 5.28 Country United States Australia New Zealan AUD 5.90 NZD 6.2 Calculate the implied LOOP values for the US-Australian dollar exchange rate and the NZ-Australian dollar exchange rate. . Answer: On January 30,...
Most questions answered within 3 hours.
-
why are special-interest travelers becoming more important to
tourism service suppliers?
asked 2 minutes ago -
A 50.0-kg child takes a ride on a Ferris wheel that rotates four
times each minute...
asked 24 minutes ago -
What happens to the distribution of gene alleles when a
reproductive isolation arises between different population...
asked 23 minutes ago -
1 – Balance the following
Bi(OH)3 + SnO22- →
SnO32- +
Bi
asked 35 minutes ago -
Explain what we mean by "The electric field at the point marked
X is 10 N/C."...
asked 47 minutes ago -
What is the positive energy states in Dirac’s picture? It says
that it leaves an empty...
asked 45 minutes ago -
A mutual fund manager has a $20 million portfolio with a beta of
1.7. The risk-free...
asked 44 minutes ago -
Given the following contribution margin income statement
Sales (15000 units 35
$/units)
asked 44 minutes ago -
The heights in feet of some of the girls of SEU
are: 5.8, 6.1, 5.9, 5.4, 5.6,...
asked 1 hour ago -
Caspian Sea Drinks is considering the purchase of a new water
filtration system produced by Rube...
asked 1 hour ago -
Compare and contrast the
social media of Pepsi and Coke? which one is most effective and...
asked 1 hour ago -
1.
Who initiates a lockout?
Group of answer choices
management
employees
unions
arbitrators
asked 1 hour ago