A case study in the chapter analyzed purchasingpower parity using the prices of Big Macs in several countries. Here are data for a few more countries:

Country Price of a Big Mac Predicted Exchange Rate Actual Exchange Rate Chile 2,640 pesos _____ pesos/$ 679 pesos/$
Hungary 850 forints _____ forints/$ 280 forints/$
Czech Republic 85 korunas _____ korunas/$ 22.3 korunas/$
Brazil 16.9 real _____ real/$ 3.72 real/$
Canada 6.77 C$ _____ C$/$ 1.33 C$/$

a. For each country, compute the predicted exchange rate in terms of the local currency per U.S. dollar.
(Recall that the U.S. price of a Big Mac was $5.58.)

b. According to purchasing-power parity, what is the predicted exchange rate between the Chilean peso and the Canadian dollar? What is the actual exchange rate?

c. How well does the theory of purchasing-power parity explain exchange rates?