1) The following table contains exchange rate data for five countries: Country Big Mac Price in Local Currency

Actual Exchange Rate

Big Mac Price in $

Implied PPP of $

Over/under valuation (%)

U.S. $3.20 $1.00/$ Norway K30.00 K10.25/$ Sweden K28.75 K10.10/$ Finland 2.85 0.95/$ Iceland K410 K145/$

a) Compute the Big Mac price (in dollars) in each country. b) Compute the PPP-implied exchange rate for each currency. c) Compute the percentage over/undervaluation for each currency.

Over/under valuation (%) 1) The following table contains exchange rate data for five countries: Country Big Mac Actual Big Mac Implied Price in Exchange Price in $ PPP of $ Local Rate Currency U.S. $3.20 $1.00/$ Norway K30.00 K10.25/$ Sweden K28.75 K10.10/$ Finland 2.85 0.95/5 Iceland K410 K145/$ a) Compute the Big Mac price in dollars) in each country. b) Compute the PPP-implied exchange rate for each currency. c) Compute the percentage over/undervaluation for each currency