Fill in the missing values in the following table. Assume that the Big Mac is selling for $4.56 in the United States. Explain whether the U.S. dollar is overvalued or undervalued relative to each of the other currencies, and predict what will happen in the future to each exchange rate if the actual exchange rate moves toward the purchasing power parity exchange rate. Finally, calculate the implied exchange rate between the Russian ruble and the New Zealand dollar and explain which currency is overvalued in terms of Big Mac purchasing power parity.
| Country |
Big Mac Price |
Implied Exchange Rate |
Actual Exchange Rate |
| Chile |
2000 pesos |
-
|
508.16 pesos per dollar |
| Israel |
17.5 shekels
|
-
|
3.65 shekels per dollar |
| Russia |
87 rubles |
-
|
32.94 rubles per dollar |
| New Zealand |
5.5 New Zealand -
dollars
|
1.28 New Zealand dollars per U.S. dollar |