1 was the yen undervalued or overvalued relative to


The Economist magazine uses the price of a Big Mac to determine whether a currency is undervalued or overvalued. In January 2016, the price of a Big Mac was $4.93 in the U.S., ¥ 370.00 in Japan, and SKr 45.00 in Sweden. The exchanges rates were 118.65 Yen per U.S. dollar and 8.60 Swedish krona per U.S. dollar.

1. Was the yen undervalued or overvalued relative to purchasing power parity?

2. Was the Swedish krona undervalued or overvalued relative to purchasing power parity?

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