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Question #6: Purchasing power parity The Big Mac Hamburger Standard Country Big Mac price in local currency Actual exchange rate Big Mac price in Implied PPP of the dollar dollars Local currency under(-) over (+) valuation United States $2.54 $2.54 Hong Kong HKS 10.70 7.80HKS/$1.00 $1.37 4.21HK$/$1.00 $2.93 Denmark DKr24.75 DKr8.46/$1.00 *The above information is from the economist. HKS Hong Kong Dollar Dkr Danish Krone DKr9.74/$1.00 ? a) Explain how the "Implied PPP" was calculated. b) Calculate the last column: what is the percent under (-) or over (+) valuation of the local currency