The Hamburger Standard 2017 Black=Computed 1:What official exchange rate would h

Question

The Hamburger Standard 2017

Black=Computed

1:What official exchange rate would have to prevail to make the citizens of Geneva and Chicago pay exactly the same for one BigMac in both cities?

2:At the current official exchange rate how many BigMacs would you be able to buy in Geneva with the $2.71 you will exchange for SF at the bank?

3:Is the SF over or under valued as compared to the USD

4:Over or under valued by what percentage?

5:In order to PPP adjust income of the USA and Switzerland measured in USD do you increase or decrease the Swiss income data by this percentage

6:After PPP adjustment of income data, are the income figure of both countries truly comparable? If yes, give 3 reasons why. If no, give 3 reasons why.     

The Hamburger Standard 2017

# BigMacs By what % Amount of How many LclCur % adjustment you can buy Implied Official is the Locl.Curr Locl.Curr BgMc can you vs $ is to GDP/Cap $GDP/Cap $ GDP Big Mac Prices in USA for PPP $ Xchg Under(-) Over(+) You get @ Buy in Ctry Under to improve Official PPP COUNTRY lcl Curr $Off.Xchg local price $1=Locl Rate Valued/USD Bank $4.79 W/Col #6? Over Comparability Xchg Rate Adjusted #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 #12 US $ $5.30 5.3 1 $59,500 59,500 Argentina Pesos 70 4.52 0.943632568 13.20754717 16.97 -0.221712011 81.2863 1.161232857 U 0.221712011 $14,060 17177.27088 China Yuan 19.8 2.88 0.60125261 3.735849057 6.79 -0.449801317 32.5241 1.642631313 U 0.449801317 $8,580 12439.2953 Denmark Kr 30 5.08 1.060542797 5.660377358 6.51 -0.13051039 31.1829 1.03943 O 0.13051039 $56,330 63681.65029 Japan Yen 380 3.47 0.724425887 71.69811321 113.06 -0.365840145 541.5574 1.425151053 U 0.365840145 $38,550 52653.13759 Switzland SF 6.5 6.82 1.423799582 1.226415094 0.96 0.277515723 4.5984 0.707446154 O -0.277515723 $80,840 58405.62893 Euro area € 3.91 4.05 0.845511482 0.737735849 0.88 -0.161663808 4.2152 1.078056266 U 0.161663808 $39,890 46338.7693 "Implied PPP=the exchange rate that would have to prevail between the $ and each local currency so as to enable buyers in each country to buy exactly one BigMac. The excahnge rate that would produce Parity in Purchasing Power in both countries. Green=data input

Black=Computed

1:What official exchange rate would have to prevail to make the citizens of Geneva and Chicago pay exactly the same for one BigMac in both cities?

2:At the current official exchange rate how many BigMacs would you be able to buy in Geneva with the $2.71 you will exchange for SF at the bank?

3:Is the SF over or under valued as compared to the USD

4:Over or under valued by what percentage?

5:In order to PPP adjust income of the USA and Switzerland measured in USD do you increase or decrease the Swiss income data by this percentage

6:After PPP adjustment of income data, are the income figure of both countries truly comparable? If yes, give 3 reasons why. If no, give 3 reasons why.     

Explanation / Answer

Answer:

1. The official exchange rate between Geneva and Chicago should be $1.3086 =1Euro=$5.30/4.05Euro.

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