A case study in Chapter 12 analyzed purchasing power parity for several countries using the price of Big Macs. Go on the Website of "The Economist" n=Newspaper at http://www.economist.com/content/big-mac-index and find the data on the Big Mac Index for January 2021 and save it to your computer. Print the January 2021 article on the Big Mac Index and attach it to your assignment. For actual exchange rates, you may use the internet.

a)Using the data table from "The Economist", fill in the data on local price of the Big Mac and actual exchange rate. Then compute the predicted exchange rate of the local currency per U.S. dollar. (Note the U.S. price of a Big Mac from the article). Make sure to show your calculations in the predicted exchange rate column.

Answer:

Country

Price of a BigMac (in local currency) Predicted Exchange Rate Actual Exchange Rate(Per $US)

Hungary Thailand China Turkey Mexico Russia

b) Summarize the article in one paragraph, highlighting the main points.

Answer:

c) Looking at the exchange rates predicted by the Purchasing Power Parity, how well do you think the theory of purchasing power parity explains exchange rates for the countries in your table in part a above?

Answer: