Question: 2. The following table provides data for 3 countries for the Big Mac Index as published by the Economist magazine. Country Price (in USD) Price

2. The following table provides data for 3 countries for the

2. The following table provides data for 3 countries for the Big Mac Index as published by the Economist magazine. Country Price (in USD) Price (in Local Currency Units) 4.30 70 5.90 Exchange Rate (LCU/USD) 1.00 16.97 United States Argentina Canada 4.30 4.13 4.53 1.30 Based on the table, answer the following questions. (a) What is the real exchange rate between the Argentine Peso (ARS) and the US Dollar (USD), i.e. QARS/USD? (4 marks) (b) Is the Canadian Dollar (CAD) over-valued or under-valued with respect to the Argentine Peso (ARS)? By how much? (4 marks) (c) Does absolute purchasing power parity hold between Argentina and United States? Why or why not? (4 marks)

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