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THE FOLLOWING REFERS TO QUESTIONS 21-23 Consider the following table of data gathered from the...

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THE FOLLOWING REFERS TO QUESTIONS 21-23 Consider the following table of data gathered from the Big Mac Index over the last few years: In local currency In dollar Implied PPP Actual Exchange rate Local currency Under/over valuation -58 8.03 2006 2007 2008 2009 Yuan 10.5 Yuan 11.0 Yuan 12.5 Yuan 12.5 1.31 1.45 1.83 1.83 3.23 3.5 3.5 6.83 6.83 -49 -49 The price of a Big Mac in the US was 3.108 in 2006, 3.415 in 2007, 3.575 in 2008 and 2009. Fill in the blanks in the table above by answering the questions below, What is the implied PPP in 2006? 03.10 4.29 5.44 3.39 The price of a Big Mac in the US was 3.10$ in 2006, 3.41$ in 2007, 3.57% in 2008 and 2009. Fill in the blanks in the table above by answering the questions below. What is the actual exchange rate in 2007? Yuan 6.4/$ Yuan 7.6/$ Yuan 11.0/$ Yuan 9.2/$ The price of a Big Mac in the US was 3.108 in 2006, 3.41$ in 2007, 3.57% in 2008 and 2009. Fill in the blanks in the table above by answering the questions below. What is the Yuan (local currency) under/over valuation in 2007? 35% -52% -58% -49%

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