The Big Mac Index- The level of implied purchasing power parity as of January 22nd 2015

Price of one Big Mac in the US $4.79

All exchange rates are quoted as the number of units of local currency required to purchase one dollar.

Big Mac prices in local currency	Big Mac prices in dollars	Implied PPP of the dollar	Actual dollar exchange rate January 2014	Under (-)/over (+) valuation against the dollar, %
Mexico	35	17
Denmark	34.5	6.42
Singapore	4.7	1.33
Switzerland	6.5	0.86

Calculate the Big Mac prices in dollars for the four respective countries; the implied purchasing power parity of the dollar and then what extent to which each country’s currency was undervalued or overvalued relative to the U.S. dollars.

Answer rating: 100% (QA)

According to Purchasing Power Parity PPP Spot Rate Price of Commodity A in Home ... View the full answer