Q1. Calculate the dollar price of a Big Mac (column 2), the implied PPP of the dollar (column 3) and the local currency under (-)/over (+) valuation (column 5) for a Big Mac in Britain and Mexico. (For Britain, please note that for the pound and for the euro, exchange rates are quoted as dollars per foreign currency. For Mexico, as for all the other currencies, exchange rates are quoted as foreign currency per dollar).

(Hint: Refer to Slide#9 in Module 6 for a sample Big Mac table) (Show your calculations!)

a) The dollar price of Big Mac in Britain is:

b) The dollar price of Big Mac in Mexico is:

c) Implied PPP (of the pound) is:

d) Implied PPP (of the peso) is:

e) Is pound overvalued or undervalued? By what percentage?

f) Is peso overvalued or undervalued? By what percentage?