Look back at the Big Mac Index in Table 20.1. Compute the level of the exchange rate that would be needed to equalize the dollar price of the Big Mac across all countries. State whether each currency appears to be currently overvalued or undervalued relative to the dollar, and calculate the amount (as a percentage) by which the currency would need to appreciate or depreciate in order to equalize the price of a Big Mac.

TABLE 20.1 The Big Mac Index Big Mac price in dollars Big Mac price in local Exchange rate per dollar ($) currency United States 4.93 dollars 1.00 dollars/$ 4.93 Norway 46.80 kroner 8.97 kroner/$ 5.22 Euro area 3.72 euros 0.93 euros/$ 4.00 118.65 yen/$ 17.44 pesos/$ 6.56 yuan/$ 370.00 yen 49.00 pesos 17.60 yuan Japan 3.12 Mexico 2.81 China 2.68 Russia 114.00 rubles 74.66 rubles/$ 1.53 South Africa 28.00 rand 15.81 rand/$ 1.77 India 127.00 rupees 66.80 rupees/$ 1.90