Table 3-1(14-1) in the text shows the percentage undervaluation or overvaluation in the Big Mac, based on

Question:

Table 3-1(14-1) in the text shows the percentage undervaluation or overvaluation in the Big Mac, based on exchange rates in July 2012. Suppose purchasing power parity holds in the long run, so that these deviations would be expected to disappear. Suppose the local currency prices of the Big Mac remained unchanged. Exchange rates on year later on July 1, 2013, were as follows:
Country Per U.S. Dollar $
Australia (A$)……………………1.08
Brazil (real) ……………………..2.23
Canada (C$)…………………….1.05
Denmark (DK) …………………5.72
India (rupee) ………………….59.43
Eurozone (€)……………………0.77
Japan (yen) …………………...99.75
Mexico (peso) ………………..12.89
Sweden (SKr) …………………6.67
Based on these data and Table 3-1(14-1), calculate the change in the from July 2012 to July 2013, and state whether the direction of change was consistent with the PPP-implied using the Big Mac Index. How might you explain the failure of the Big Mac Index to correctly predict the change in the nominal between July 2012 and July 2013?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...