Using data from The Economist\'s Big Mac Index for 2016, the following table sho

Question

Using data from The Economist's Big Mac Index for 2016, the following table shows the local currency price of a Big Mac in several countries as well as the actual exchange rate between each country and the United States. At the time of the data collection, a Big Mac would have cost you $4.93 in the United States and GBP 2.89 in the United Kingdom. The actual exchange rate between the British pound and the U.S. dollar was $1.63 per pound. The dollar price of a Big Mac purchased in the United Kingdom was, therefore, computed as follows:

15. Purchasing power parity Using data from The Economist's Big Mac Index for 2016, the following table shows the local currency price of a Big Mac in several countries as well as the actual exchange rate between each country and the United States. At the time of the data collection, a Big Mac would have cost you $4.93 in the United States and GBP 2.89 in the United Kingdom. The actual exchange rate between the Brtish pound and the U.S. dollar was $1.63 per pound. The dollar price of a Big Mac purchased in the United Kingdom was, therefore, computed as follows: $1.63 GBP 1.00 Dollar price of a Big Mac in the United Kingdom = GBP 2.89x S4.71 For the price you paid for a Big Mac in the United States, you could have purchased a Big Mac in the United Kingdom and had some change left over for fries! Complete the final column of the table by computing the dollar price of a Big Mac for the countries where this amount is not given Note: Round your answers to the nearest cent.

Explanation / Answer

PPP exchange rarate in argentina = 4.93/33 = 0.149. This means peso had appreciated against dollar.

C) because it costs $2.31 in Argentina and 4.93 in US .

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