Question: Use the table that follows to answer this question. Treat the country listed as the home country, and the United States as the foreign country.

Use the table that follows to answer this question. Treat the country listed as the home country, and the United States as the foreign country. Suppose the cost of the market basket in the United States is PUS = $190. Check to see whether PPP holds for each of the countries listed, and determine whether we should expect a real appreciation or real depreciation for each country (relative to the United States) in the long run. For the answer, create a table similar to the one shown and fill in the blank cells.

Country Price of Is FX currency expected to have Real appreciation or (currency measured Is FX currency Price of U.S. basket Real market Per S, basket units) s(in FX) in FX (Pus times rate exchange Does PP in FX hold?overvalued or (yes/no) undervalued? depreciation? COUNT Brazil India Mexico South Africa 6.9294 800 Zimbabwe 101,347 4,000,000 (rupee) (peso) (rand) 2.1893 520 46.6672 12,000 11.0131 1,800 (25)

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