12.When the Chips Are Down The Economist magazine uses the price of a Big  Mac to determine whether a currency is undervalued or overvalue. In July 2010, the price of a Big Mac was $3.73 in New York, 13.2 yuan in Beijing, and 6.50 Swiss francs in Geneva. The exchanges rates were 6.78 yuan per U.S. dollar and 1.05 Swiss francs per U.S. dollar. a. Was the yuan undervalued or overvalued relative to purchasing power parity? b. Was the Swiss franc undervalued or overvalued relative to purchasing power parity c. Do you think the price of a Big Mac in different countries provides a valid test of purchasing power parity?

12.When the Chips Are Down

The Economist magazine uses the price of a Big  Mac to determine whether a currency is undervalued or overvalue. In July 2010, the price of a Big Mac was $3.73 in New York, 13.2 yuan in Beijing, and 6.50 Swiss francs in Geneva. The exchanges rates were 6.78 yuan per U.S. dollar and 1.05 Swiss francs per U.S. dollar.

a. Was the yuan undervalued or overvalued relative to purchasing power parity?

b. Was the Swiss franc undervalued or overvalued relative to purchasing power parity

c. Do you think the price of a Big Mac in different countries provides a valid test of purchasing power parity?

13.The price level in the Eurozone is 112.4, the prize level in the United States in 109.1 and the nominal exchange rate was 80 euro cents per U.S dollar. what was the real exchange rate expressed as Eurozone real  GDP per unit of U.S. read GDP?

14.The Canadian price level is 106.3 the Japanese price level is 95.4 and the real exchange rate is 103.6 Japanese real GDP per unit of U.S. real GDP. What is the nominal exchange rate?