a) Table 1 shows the most recent data on the Big Mac Index. According to this table, how would you compare the different currencies listed in it? Relate your comments to a theory you learnt in our module. In particular, explain what countries in the list are expected to have their currency depreciating with respect to the U.S. dollar after Jan 2022. Do not make any calculations in this question.

Table 1

[9 marks]

Country Argentina Australia Brazil Switzerland Chile China Colombia Euro area Britain Japan Mexico Turkey United States South Africa Table 1 Local Price Local Price Converted to Converted to U.S. Dollars U.S. Dollars Jan 2022 Jan 2021 4.29 3.75 4.51 4.98 4.31 3.98 6.98 7.29 3.88 4.09 3.83 3.46 3.29 3.74 4.95 5.16 4.82 4.44 3.38 3.74 3.34 2.68 1.86 2.01 5.81 5.66 2.58 2.16 Local Price Converted to U.S. Dollars (Jan 2022/ Jan2021) 14.3% -9.5% 8.4% -4.2% -5.0% 10.8% -12.2% -4.1% 8.5% -9.5% 24.5% -7.2% 2.7% 19.5%