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: For each country, select the predicted exchange rate of the local currency per U.S. dollar. (Hint: Recall that the U.S. price of a Big Mac was $5.58.) Country Chile Hungary Czech Republic Brazil Canada Price of a Big Mac Predicted Exchange Rate 2,640 pesos 850 forints 85 korunas 16.9 real 6.77 C$ Actual Exchange Rate 679 pesos/$ 280 forints/$ 22.3 korunas/$ 3.72 real/$ 1.33 C$/$ According to purchasing-power parity, the predicted exchange rate between the Hungarian forint and the Canadian dollar is dollar. However, the actual exchange rate is forints per Canadian dollar. forints per Canadian

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: For each country, select the predicted exchange rate of the local currency per U.S. dollar. (Hint: Recall that the U.S. price of a Big Mac was $5.58.) Country Chile Hungary Czech Republic Brazil Canada Price of a Big Mac Predicted Exchange Rate 2,640 pesos 850 forints 85 korunas 16.9 real 6.77 C$ Actual Exchange Rate 679 pesos/$ 280 forints/$ 22.3 korunas/$ 3.72 real/$ 1.33 C$/$ According to purchasing-power parity, the predicted exchange rate between the Hungarian forint and the Canadian dollar is dollar. However, the actual exchange rate is forints per Canadian dollar. forints per Canadian

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter29: International Finance

Section: Chapter Questions

Problem 8P

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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 a Big Mac Predicted Exchange Rate 11,900 pesos For each country, select the predicted exchange rate of the local currency per U.S. dollar. (Hint: Recall that the U.S. price of a Big Mac was $5.5 Country Colombia Actual Exchange Rate 3,192 pesos/$ Sri Lanka 580 rupees Russia 110 rubles 182 rupees/$ 67 rubles/$ Saudi Arabia France 12 riyals 4.05 € 3.75 riyals/$ 0.87 €/$ According to purchasing-power parity, the predicted exchange rate between the Sri Lankan rupee and the euro is actual exchange rate is rupees per euro. rupees per euro. However, th
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A case study in the chapter analyzed purchasingpower parity for several countries using the pricc ofBig Macs. Here arc data for a few more countries: a. For each country, compute the predicted exchangerate of the local currency per U.S. dollar. (Recallthat the U.S. price o( a Big Mac was $4.93.)b. According to purchasing-power parity, what is thepredicted exchange rate between the Hungarianforint and the Canadian dollar? What is the actualexchange rate?c. How well docs the theory of purchasing-powerparity explain exchange rates?
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