A case study in the chapter analyzed purchasing-power parity for several countries using the price of Big Macs. Here are data for a few more countries: Price of Big Mac is $5.28. Country Price of a Big Mac Predicted Exchange Rate Actual Exchange Rate Indonesia 35 750 rupiah ___ rupiah/$US 13 359 rupiah/$US Hungary 864 forint ___ forint/$US 252 forint/$US Czech Republic 79 koruna ___ koruna/$US 20.75koruna/$US Thailand 119 baht ___ baht/$US 31.95 baht/$US China 20.4 yuan ___ yuan/$US 6.43 yuan/$US For each country, compute the predicted exchange rate of the local currency per U.S. dollar. (Recall that the U.S. price of a Big Mac was $5.28.) How well does the theory of purchasing-power parity explain exchange rates?
A case study in the chapter analyzed purchasing-power parity for several countries using the price of Big Macs. Here are data for a few more countries: Price of Big Mac is $5.28. Country Price of a Big Mac Predicted Exchange Rate Actual Exchange Rate Indonesia 35 750 rupiah ___ rupiah/$US 13 359 rupiah/$US Hungary 864 forint ___ forint/$US 252 forint/$US Czech Republic 79 koruna ___ koruna/$US 20.75koruna/$US Thailand 119 baht ___ baht/$US 31.95 baht/$US China 20.4 yuan ___ yuan/$US 6.43 yuan/$US For each country, compute the predicted exchange rate of the local currency per U.S. dollar. (Recall that the U.S. price of a Big Mac was $5.28.) How well does the theory of purchasing-power parity explain exchange rates?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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- A case study in the chapter analyzed purchasing-power parity for several countries using the
price of Big Macs. Here are data for a few more countries: Price of Big Mac is $5.28.
Country Price of a Big Mac Predicted Exchange Rate Actual Exchange Rate
Indonesia 35 750 rupiah ___ rupiah/$US 13 359 rupiah/$US
Hungary 864 forint ___ forint/$US 252 forint/$US
Czech Republic 79 koruna ___ koruna/$US 20.75koruna/$US
Thailand 119 baht ___ baht/$US 31.95 baht/$US
China 20.4 yuan ___ yuan/$US 6.43 yuan/$US
- For each country, compute the predicted exchange rate of the local currency per U.S. dollar. (Recall that the U.S. price of a Big Mac was $5.28.) How well does the theory of purchasing-power parity explain exchange rates?
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