One way to get your head around relative currency valuations is to look at what the same goods cost in New York, London, Tokyo, Beijing and elsewhere on the globe. So back in 1986, the Economist magazine created the now-famous "Big Mac Index," a tongue-in-cheek but surprisingly useful way of measuring purchasing power parity, or PPP. It became so popular that academics have written PhD dissertations on it, and it is cited in several introductory economics textbooks as well.
By comparing the cost of Big Macs — an identical item sold in about 120 countries — the Big Mac Index gives you an insight into the relative over- and undervaluation of the world's currencies compared to the U.S. dollar. It does so by calculating the exchange rate (the Big Mac PPP) that would result in Big Macs costing the same in the United States as they do in a particular foreign country.
Your assignment:
Given the following
Country
|
Price of Big Mac
|
Exchange Rate:$
|
Big Mac/Exchange
|
Over/Undervalued
|
USA
|
$4.79
|
$1 = $1
|
$4.79/1 = $4.79
|
Equal
|
Great Britain
|
2.89 GBP
|
$1 = .66 GBP
|
2.89/.66 =$4.37
|
Undervalued
|
First define Purchasing Power Parity. For 2 of the remaining rows, select one of the 120 countries
that sell Big Macs and determine if their currencies are overvalued or
undervalued versus the U.S. dollar. Be sure to fill in the rest of the row entries for your countries.Do not select a country that has already
been taken by one of your classmates. Why are your currencies appreciating or depreciating versus the dollar?
Since we are running out of countries, 6th period will look up the price of the KFC 2 piece value meal, $5.99 in the USA.
Since we are running out of countries, 6th period will look up the price of the KFC 2 piece value meal, $5.99 in the USA.
146 comments:
Currency: Norwegian Krone
Country: Norway
Price of Big Mac:$6.79
Exchange rate:$1=0.12 NK
Big Mac exchange: $6.79/0.12=$56.58
Overvalued/undervalued= Overvalued
Beijing: 14.5 yuan $1.00 = 6.65 yuan 14.5/6.65 = 2.18 undervalued
Purchasing Power Parity (PPP) is An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Norway, $5.65, $1=$8.66, 8.66/5.65=$1.53, Undervalued
Brazil, $4.28, $1=$3.74, 3.74/4.28=$.87, Undervalued
France: 3.9 Euros $1= .74Euro $5.27 Overvalued
China
Price: 17 Yuan
Rate: $1 = 6.41 Yuan
Exchange: 17/6.41 = $2.61
Undervalued
Japan
Price: 370 Yen
Rate: $1 = 123.42 Yen
Exchange: 370/123.42 = $3.00
Undervalued
Tim Cummins Period 2
Singapore: 4.7 SGD| $1=1.4 SGD| 4.7/1.4= $3.36 Undervalued
Purchasing power parity is an economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Colombia- $2.92 - $2.709 - undervalued by 39.1%
Denmark - $5.08 - $6.81 - overvalued by 6.0%
Ryan Phu
Period 2
Denmark: $5.08, $1/$1.06, $5.08/$1.06=
$4.72, Undervalued
Canada: $4.54, $1/$0.95, $4.54/$0.95=$4.78, Undervalued
Venezuela
Price: 4.18 bolivar
Exchange Rate: 1 bolivar=$0.16
US Value: $0.67
Undervalued
Sarah Gosch, 2nd period
Germany: 2.99 euros. 1 euro =1.08 dollars. Translates into 3.23 dollars. Is overvalued.
2nd Period Kevin Koruthu
India : 108.07 rupees Exchange rate:1US = 66.71 rupees 108.07/66.71 Price :$1.62 Undervalued
Maya Ewens
2nd period
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Australia, $4.81, $1 = $1.37, $3.51, undervalued
Purchasing power parity is a theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Country: Price of Big Mac: Exchange rate: Big Mac exchange rate: Over/under:
Nairobi Shilling 654 $1=102.62 Kenyan shilling 654/102.62= $6.73 overvalued
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Uruguay-$4.13-13.7-27.35-23.59
Taiwan-$2.55-46.8-31.02-16.49
Currency: Malaysian rinngit
Country: Malaysai
Price of big mac: $2.34
Exchange rate: $1=0.24 MR
Big Mac exchange: $2.34/0.24= $9.75
Overvalued/undervalued= overvalued
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
New Zealand: $5.20 $1=.83$ $6.26 Overvalued
Sri Lanka: 350LKR| $1=143.18 LKR| 350/143.18= $2.44 Undervalued
Taiwan
Price: 0.08 Taiwan dollars
Exchange Rate: $1=0.30 Taiwan dollars
US Value: $2.55
Undervalued
Sarah Gosch, 2nd period
Venezuela: 75 venezuelan bolivar $1.00 = 6.35 venezuelan bolivar 75/6.35= 11.80 overvalued
Norway
Big Mac $7.80
exchange rate $1=$8.67 Krone
Exchange $7.80/ $8.67=$.90
undervalued
Ben Joel
2nd Period
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Indonesia-30,500 Rupiah-1 dollar=13,145 rupiah-$2.32-Undervalued
Israel-17.50 Shekel-1 Dollar=3.78 Shekel-$4.63-Undervalued
Arun Christopher
2nd
Switzerland-.90 to a dollar
6.83/.9= 7.59 overvalued
Maya Ewens
2nd period
Australia currency is depreciating because lower global growth, weaker Australian terms of trade, narrowing interest rate differentials between the US and Australia, US dollar strength and continued pressure on Asian currencies will continue to weigh on the Aussie moving forward.
Cuba, $3.14, $1=$3.37, 0.93, undervalued
Last one was peru not cuba
ulises osorio 2nd period
Purchasing Power Parity(PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Belgium:local price-3.7 euros
Dollar exchange rate-.74 euros
Price in dollars-4.98 dollars
dollar PPP-.77
IT is overvalued because Belgium's economy has been slipping the last 4 years because of government spending and lower GDP.
Portugal: Local price- 3 euros
dollar exchange rate-.74 euros
price in dollars- 4.04
Dollar PPP-.63
it is undervalued because portugal's economy has been going up the last 5 years, as they have moved up 5 spots in Europe's best economies.
United Kingdom
Big Mac 2.29
exchange rate .66 pound
exchange $2.29/.66= 3.47
overvalued
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Ryan Phu
Period 2
Purchasing power parity (PPP) is a theory in which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Denmark's currency is undervalued because it uses the Euro. The Euro's value is being brought down by countries such as Greece.
Canada's currency is undervalued because most of its trade is with it's neighbor, the United States of America. this is because Canada doesn't have as many natural resources as the U.S and so they have to get most of their goods from America such as oil.
Japan
Price:
370 Yen
Rate:
$1 = 123.42 Yen
Exchange:
370/123.42 = $3.00
Undervalued
Mexico
Price:
80.54 Pesos
Rate:
$1 = 16.82 Pesos
Exchange:
80.54/16.82 = $4.79
Equal
An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Brazil Price 4.28 Exchange rate: $1USD =3.74 BRL Big Mac Exchange: 4.28/3.74= 1.14 undervalued
India:
Price of Big Mac: 90 rupees
Exchange Rate: 1$= 66.73 Rupees
Big MAC:1.50$
Overvalued
Stricklin Snyder
Period 2
Ukraine: 19; 11.69 exchange rate; $1.63; undervalued
Sri Lanka: 350; 130.26 exchange rate; $2.69; undervalued
The conflict in Eastern Ukraine and international reserves only enough to last for two months, are among the key reasons for the hryvnia’s fall. Because of this, Ukraine has begun rationing in its markets.
The rupee has fallen in value because of an economic scare for China and has since lost value because investors are pulling out of the area.
UAE
3.67 to a dollar
3.54/3.67=.96 undevalued
Arun Christopher
2nd
Tim Cummins
Period 2
From my earlier China and Japan, the Yuan and Yen are depreciating because the strategy of Japan argues that a weaker yen will reverse the recent decline in Tokyo's trade surplus from the gargantuan levels of years past.In China they purposely let the value depreciate in hopes of boosting economic growth.
The concept of purchasing power parity allows one to estimate what the exchange rate between two currencies would have to be in order for the exchange to be at par with the purchasing power of the two countries' currencies.
Hong Kong: 16.5 hdk equals 2.13 dollars. 1 dollar equals 7.75 hdk. Undervalued.
Jeremy Tanueco
Period 2
Purchasing Power Parity (PPP) is an exchange rate of one currency for another which compares how much a typical basket of goods in one country costs compared to that of another country.
Philippines: overvalued
Canada: overvalued
Brazil's currency depreciated because stocks fell on concern that President Dilma Rousseff will fail to shore up the country’s budget and avoid further credit-rating cuts.
Falling oil prices is the blame for the sudden weakness of Norway’s currency after years of record strength. Therefore, the drop in oil prices is causing Norway's Krone to depreciate.
Peru's downward currency value is part of the depreciation of the sol in previous months coincides with ongoing weakness in the Peruvian economy as the export sector decelerates and commodity prices hover at multi-year lows.
Country- France
Price of Big mac- 3.90 Euros
Exchange Rate- .74
Big mac/ Exchange- 3.9/.74= 5.25
Overvalued because France unemployment has been high in recent months.
Country- Serbia
Price of Big mac- 200 RSD
Exchange Rate- 1$ = 67RSD
Big mac exchange- 200/67= 2.99
Undervalued
Reason - Mc donalds in Serbia is considered an expensive restaurant, and only the rich dine at Mcdonalds.
Purchasing power parity, or PPP, is the theory that an exchange rate between two countries is in equilibrium when domestic purchasing power is equivalent.
Venezuela: The Venezuelan bolivar is undervalued because of the Venezuelan government's policies. Currently, they withhold US dollars as a form of price controls, but this has led to shortages of necessities and inflation of the bolivar.
Taiwan:Taiwan's economy is export-driven, so the government keeps the TWD value low in order to make their prices competitive in other countries.
Sarah Gosch, 2nd period
Uruguay- The Uruguayan peso is constantly devaluing constantly. As a consequence of the instability of the local currency, prices for most big-ticket items are denominated in U.S. dollars. (Depreciating) (UNDERVALUED)
Taiwan- A New Taiwan Dollar was introduced in 1949 in an attempt to counter the hyperinflation. The 'old' Taiwan Dollar was devalued at an extreme exchange rate of 4000 to 1 Taiwan dollar. In 2000, the New Taiwan Dollar became the official currency of the Republic of China. (Depreciating) (UNDERVALUED)
Indonesia
Price of big Mac: 17939
Exchange Rate: 11505.00=1$
Big Mac: 2.43$
Overvalued
Czech Republic
Price of Big Mac: 70.45 CZK
Exchange Rate: $1=24.98 CZK
Big Mac/Exchange: 70.45/24.98= $2.82
Undervalued
Amira Nickerson
Period 2
Jenny Dyess
Period 2
Purchasing Power Parity says exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Iceland is overvalued. 1039 ISK (Icelandic Krona) which is $7.98. 130.26 ISK =$1. The value of the ISK went up because the Icelandic banks gave overseas investors higher interest rates than the people could get in their home countries.
Singapore is undervalued. there are 4.7 Singapore Dollars to buy a big mac. The exchange rate is 1.4 Singapore Dollars to 1 US Dollar, making a Big Mac cost $3.80
Anna Lee
2nd period
Purchasing Power Parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Latvia: 2.45 Euro/Big Mac, $1 = 0.92 Euro, $2.66/Big Mac, Undervalued
Latvia didn't do anything to cushion its subsequent crash. It didn't devalue its currency, and it didn't increase government spending. Instead, it kept its currency pegged to the euro. Latvia chose so-called internal devaluation over actual devaluation, because it didn't want to derail its euro entry out of fear of Russia.
Hannah Stone 2nd Period
Country: Russia
Price of Big Mac: 107.00 Rouble
Exchange Rate: $1= 68.85 Rouble
Big Mac/ Exchange= 107/68.85= $1.55
Undervalued
This currency is lower because oil prices fell and investors pulled their money from the country. Also inflation is very high.
Country: South Korea
Price of Big Mac: 4300 Won
Exchange Rate: $1=1170.84 Won
Big Mac/ Exchange: 4300/1170.84= $3.67
Undervalued
This currency is lower because the government decided not to cut interest rates and the currency fell lower.
Egypt Price 2.16 Exchange rate: $1USD =7.84 EGP Big Mac Exchange: 2.16/7.84= .28 undervalued
Country: Price of Big Mac: Exchange rate: Big Mac exchange rate: Over/under:
Peru 10 Peruvian nuevo sol $1= 3.37 $10/3.37=$2.97 undervalued
Stanie Clement
Period 2
Purchase Power Parity-An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Uruguay
Price: 113 Uruguay currency
Exchange Rate: $1=24.43
Big Mac: $4.63
Over/Undervalued: Undervalued
South Korea
Price: 4100
Exchange Rate: 1083.30
Big Mac: $3.78
Over/Undervalued: Undervalued
Since the aforementioned countries are experiencing inflation, the big mac in these countries cost a large amount of the national currency. However, the exchange rate does not reflect the inflation, so the prices remain undervalued.
Ben Joel
2nd Period
The rupiah (Rp) is the official currency of Indonesia and is subdivided into 100 sen. The name derives from the Indian monetary unit rupee which is called as rupiya in Indian languages. Informally, Indonesians also use the word "perak" in referring to rupiah. Inflation has now rendered all coins and banknotes denominated in sen obsolete.
The economy of Israel is a technologically advanced market economy. As of 2013, Israel ranks 19th among 187 nations on the UN's Human Development Index, which places it in the category of "Very Highly Developed" making Israel ahead of developed Western European countries like France, Austria and Belgium.
Meghna George
Period 2
Purchasing power parity:An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Switzerland: $6.81, exchange rate:1, Big mac/exchange rate: 6.81, Over valued
The value of a Switz Franc appreciated because economy is heavily reliant on selling things abroad: exports of goods and services are worth over 70% of GDP.
Thailand:$2.46,35.87 mac/exchange rate:, 0.06,undervalued
Thailand’s high exchange rate and excessive
spending caused a depreication in the value of their currency.
Purchasing power parity is a theory that states exchange rates between currencies are in equilibrium when their purchasing power is the same in both of the countries being considered.
India : 108.07 rupees Exchange rate: 1 US = 66.71 rupees 108.07/66.71 Price :$1.62 Undervalued
This is because of huge gold imports in India and weak stock markets as of right now.
Russia : 89 Rubles Exchange Rate: 34.84 89/34.84 Price : $2.55 Undervalued
The Russian Ruble has depreciated after the annexation of Crimea by Putin as it stayed steady around 30 Rubles to 1 US Dollar. It has now gone up to about 89 Rubles to a Dollar.
The price of living in Switzerland is already high, so it would make sense that the big macs price would be high as well.
The cost of living in the UAE isn't that expensive, so the big macs would be a lot lower.
Arun Christopher
2nd
Egypt(Redo) Price 16.93 EGP Exchange rate: $1USD =7.84 EGP Big Mac Exchange: 16.93/7.84= 2.16 undervalued
Singapore is undervalued because it used to be nonexistent because they used Spanish money and now it is trying to gain respect and value in the global economy.
Jenny Dyess P2
Purchasing Power Parity is a theory that the exchange rate between two countries is equal when their purchasing power is the same. In the case of Sri Lanka, their rupee is depreciating due to political instability. In Singapore, their currency has recently begun to depreciate due to China's economic turmoil in the past few months.
Sabrina James
Period 2
Purchasing power parity is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Turkey: 9.25; $1=2.91 lira; 3.18 lira; undervalued
Tensions between Turkey and Russia are rising, as is civil unrest in Turkey, and these social and political factors are likely causing the value of their currency to decrease.
Poland: 9.2; $1=3.99 zloty; 2.31 zloty; undervalued
The Populist Law and Justice party has recently come back into power, and is unconstitutionally replacing government officials and backtracked on Poland's commitments to the EU. This governmental uncertainty is likely affecting the value of their currency.
Anna Lee
2nd period
Continuation of first post...
Austria: 3.39 Euro/Big Mac, $1 = 0.92 Euro, $3.68/Big Mac, Undervalued
Three factors have combined to send the euro down by more than 1% against the dollar to $1.0540: the likelihood of an increase in US interest rates; the deepening crisis in Greece; and the effect of the ECB’s quantitative easing programme, launched this month.
Poland :9.20 Polish Zloty $1.00 = 3.99 Polish Zloty 9.20/3.99 = 2.30 undervalued.
Poland’s economic freedom score is 68.6, making its economy the 42nd freest in the 2015 Index.Poland gained a policy of economic liberalization throughout the 1990s, which resulted in positive economic growth.
Chile: 2100 Chilean Peso $1.00 = 706.89 Chilean Peso 2100/706.89 = 2.97 undervalued.
Chile’s economic freedom score is 78.5, making its economy the 7th freest in the 2015 Index. The economy of Chile is ranked as a high-income economy by the World Bank, and is considered one of South America's most stable and prosperous nations.
Jeremy Tanueco
Period 2
Corrections to my previous post:
Philippines: undervalued
Costa Rica: undervalued
Purchasing Power Parity (PPP) is n economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Currency: Costa Rican colón
Country: Costa Rica
Price of Big Mac:2543.59 Costa Rican Colón
Exchange Rate:$1= 531.02
Big Mac exchange: 2543.59/531.02= 4.79
Overvalued
Currency:Cambodian Riel
Country: Cambodia
Price of Big Mac: 19,984 Riel
Exchange Rate:$1= 4025.80 Cambodian Riel
Big Mac exchange: 19,984/4025.80= 4.96
Overvalued
The reason Kenyan's currency is inflated is because many people are needing money in order to pay home loans. Kenya is a developing country and they think printing more money will allow more purchasing power to the consumer. However it has created inflation and the people living there have to spend more for the same products.
Peru has recently introduced a new currency in 1991. Before this new currency, there was major inflation in the country. However, after the new currency was implemented, inflation has been very stable in the country and this has allowed them to have a normal standard of living.
Pakistan
Price of Big Mac:300 PKR
Exchange Rate: $1=104.88 PKR
Big Mac/Exchange: 300/104.88= $2.86
Undervalued
Amira Nickerson
Period 2
Purchasing power Parity: An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
CORRECTION TO LAST POST SINCE SABRINA STOLE POLAND
UAE:13 UAE dirham $1.00 = 3.67 UAE dirham 13/3.67 = 3.54 undervalued.
The UAE has one of the most open economies in the world and welcomes business and trade since Gulf history, when ships sailed to India and along the coast of East Africa as far south as Mozambique.
Purchasing power parity is a theory that states exchange rates between currencies are in equilibrium when their purchasing power is the same in both of the countries being considered.
India : 108.07 rupees Exchange rate: 1 US = 66.71 rupees 108.07/66.71 Price :$1.62 Undervalued
This is because of huge gold imports in India and weak stock markets as of right now.
Russia : 11 Riyal Exchange Rate: 3.76 11.3.76 Price : $3.00 Undervalued
The Russian Ruble has depreciated after the annexation of Crimea by Putin as it stayed steady around 30 Rubles to 1 US Dollar. It has now gone up to about 89 Rubles to a Dollar.
The riyal will fall and rise with the price of oil and currently oil is in a low spot.
Anonymous Kevin Koruthu said...
Purchasing power parity is a theory that states exchange rates between currencies are in equilibrium when their purchasing power is the same in both of the countries being considered.
India : 108.07 rupees Exchange rate: 1 US = 66.71 rupees 108.07/66.71 Price :$1.62 Undervalued
This is because of huge gold imports in India and weak stock markets as of right now.
Saudi Arabia : 11 Riyal Exchange Rate: 3.76 11.3.76 Price : $3.00 Undervalued
The riyal will fall and rise with the price of oil and currently oil is in a low spot.
Saudi Arabia
Big Mac $2.93
exchange rate $3.75
exchange= $.78
undervalued
Anna Lee
2nd
Sweden: $5.13/Big Mac, 43.89 Swedish Krona/Big Mac, 8.56 Swedish Krona = $1, Same
The Swedish currency was ranked 11th among the top twenty most traded currencies by value on an average daily turnover basis in April 2013. Of course out of the major (G10) currencies – US dollar (ranked 1st) to New Zealand dollar (ranked 10th) and those outside in the top 20 – the Swedish Krona is top of that pile from the above mentioned stats.
Jesy Dulay
Period 4
Vietnam $2.75 ; $1.00=₫22471.91 ; $2.75=₫61797.75 ; Overvalued
Argentina $3.07 ; $1.00=9.72 ; 3.07=29.83 ; Overvalued
William Mitchell
4th Period
Ireland: Priced at €3.64. $ to € is 1.08:1
Converted price is aprox. $3.93, underpriced.
Paige Price
Period 4
Hungary:
Price: $3.18/ Forint 900.00
Undervalued by 33.6%
Exchange rate: 282.88= 1 US dollar
Argentina:
Price: $3.07/(Peso 28.00)
Undervalued by 36.0%
Actual exchange rate: 9.14 pesos + 1 US Dollar
William Mitchell
4th Period
Finland: Priced at €4.28. $ to € is 1.08:1
Converted Price is aprox. $4.62, underpriced.
Karina Harris 4th Period
Panama 1 Balboa= 1 US Dollar
Same Price as US Big mac
currencies are equal
Tiffany Chan
4th Period
Luxembourg: 8 Euros/Big Mac, $1= 1.08 Euros, 8/1.08= $7.41. Overvalued.
Seyi Soyebo
Period 4
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Paige Price
*EDIT TO MY LAST POST, not Argentina
Spain:
Price: $4.23 (3.65 euros)
Exchange rate: 0.86 %
Undervalued
Geo Kuzhippil
4th
Peru
Currency:Peruvian nuevo sol
Big Mac: 3.14$
exchange rate:1 US Dollar equals
3.38 Peruvian Nuevo Sol
exchange:3.14/3.38=.93
undervalued
Czech Republic
Currency:Czech koruna
Big Mac: 2.83
exchange rate: 1 US Dollar equals
24.92 Czech Republic Koruna
exchange: 2.83/24.92= .11
Tiffany Chan
4th Period
Romania: 22 lei/Big Mac, $1=4.13 Romanian leu, 22/4.13 = $5.33. Overvalued.
Purchasing Power Parity is a theory that states that exchange rates between different currencies are in equilibrium when the purchasing power is the same for the two countries.
Hannah Reyes
Period 4
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Thailand
Price of Big Mac- Baht 108.00
Exchange Rate- 1 USD= .028 Baht
Big Mac*Exchange- 108.00 Baht*.028 USD = 3.024 USD
Undervalued
Indonesia
Price for Big Mac- Rupiah 30500
Exchange Rate- 1 USD= 13856.96 Rupiah
Big Mac/Exchange Rate- 30500 Rupiah/13856.96 = $2.29
Undervalued
Indonesia
Timothy Chang
4th period
Timothy Chang
4th period
Purchasing power parity (PPP) is the economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power
Vietnam 60000 Vietnamese Dong US$1=22,124 Dong 60000/22124=$2.71 Undervalued
The currency is depreciating because the economy is growing at a steady rate, meaning there is high inflation.
Hanna Shanar 5th period
South Africa
1 US Dollar= .069 US $'s
Price of Big Mac in SA= $2.09
Price of Big Mac in SA= 26.00 Rand
Undervalued, half the price of the U.S's cost.
Period 4
Purchasing Power Parity is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Price of Big Mac in Jordan: Dinar 4.767
Exchange Rate: $7
Big Mac/Exchange: $.68
-Undervalued
Price of Big Mac in Yemen: 1.833 ﷼
Exchange Rate: $9
Big Mac/Exchange: $.20
-Undervalued
Vinit shah
4th
Vietnam : 60,000/Big Mac; $1= 21380 Vietnamese Dong; 60,000/21380= 2.81; overvalued
Spain: 3.65 Euro/ Big Mac; $1 = .86 Euros; 3.65/.86= 4.24; undervalued
Both of these countries depend on tourists' money, so if they do not come a lot, their economy weakens, especially Vietnam.
Aruba
.56 Arubin Florins= 1 US dollar
Price of Big Mac in Aruba= 4.95 Florins
Price of Big Mac in Aruba= $2.77
Undervalued
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Price of Big Mac in US - $4.79
Estonia
1 US dollar = .92 Euro
Price of Big Mac in Estonia - $2.90
$2.90 / .92 = $3.152
Under/Overvalued? Undervalued
Seyi Soyebo
Period 4
Philippines
110 Peso
EXC RATE: $1=41.8 peso
BIG MAC EXC : 110/41.8=2.63
OVERVALUED
ITALY
Price - 3.85 euros
Exc.Rate - $1=.86
BigMAC Rate - 3.85/.86=4.47
UNDERVALUED
Ikechi Enyioma
Purchasing Power Parity (PPP) is the theory which states that when exchange rates are in equilibrium, the purchasing power will also be the same.
Italy
1 U.S. Dollar = 1.08 U.S. Dollars inn Italy
Big Macs in the U.S. = $4.80
Big Macs in Italy = $4.44
The price of Big Macs in Italy is slightly undervalued compared to the U.S.
Giovanny Dominguez
4th Period
Paraguay : $1.90/Big Mac,10000 Guaranis/Big Mac,1 dollar= 5,789.00 Guaranis,Undervalued
Big Mac Exchange Rate: .00032821
Argentina : $3.25/ Big Mac,28 pesos/Big Mac , 1 dollar = 9.71 Argentine Peso, Undervalued
Big Mac exchange Rate : .33470649
These countries are the dollar because of traveling and tourism in the country.
Karina Harris
El Salvadpr
1 US DOLLAR = .92 EURO
US big mac = 4.79 us Dollars
El Salvador big mac = 4.42 us Dollars
Hannah Reyes
Per 4
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Gibraltar
Price of Big Mac- 6 Euros
Exchange Rate- 1 Euro=1.51 USD
Big Mac*Exchange- 6 Euros*1.51 USD= 9.06 USD
Overvalued
Tunisia
Price of Big Mac- 7 Dinar
Exchange Rate- 1 Dinar=0.49 USD
Big Mac*Exchange Rate- 7 Dinar*0.49 USD = 3.43 USD
Undervalued
Netherlands
1 US dollar = 1.79 Netherlands Antillean Guilder
Price of Big Mac in the Netherlands -$3.45
$3.45 / 1.79 = $1.927
Under/Overvalued? Undervalued
(...continued)
The prices in Yemen and Jordan are depreciating from the price in the US because the exchange rate if different for both countries. Also, Yemen and Jordan are poorer countries compared to the US.
Timothy Chang
Period 4
*ignore last post
Purchasing power parity (PPP) is the economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power
Lithuania, $1=3.17169 Lithuanian Litas, 8.95 Litas, 8.95/3.17169= $2.82 Undervalued
Moldova, $1=19.485 Moldovan Leu, 52 Leu, 52/19.485= $2.67 Undervalued
Both countries, being former Soviet Repubics, have grown economically since the dissolution, causing inflation. This causes their currencies to depreciate over time.
Purchasing power Parity: An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Sierra Leone
Big Mac 25,000 Leone
Exchange Rate $1 = $4114.38
Exchange $25,000/$4114.38 =$6.08
Overvalued
Sierra Leone's Leone is depreciating due to high amounts of inflation.
Mozambique
Big Mac $341 MT
Exchange Rate $1 = $0.92 MT
Exchange $341/$0.92 = $2.67
Undervalued
The recent depreciation of the Mozambican currency, the metical, “should not plunge us into pessimism leading to panic and despair”, urged Prime Minister Carlos Agostinho do Rosario.
Rolando Pineda, 4th period
Purchasing Power Parity: An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Colombia: 7900 Colombian pesos/Big Mac, $1=3274.75 Colombian pesos, 7900/3274.75=$2.41, undervalued
Greece: 3.05 GRD/Big Mac, $1=314.8 GRD, 3.05/314.8=$0.00969, undervalued
These currencies are undervalued because the economy of Greece is currently in a deep depression and the economy of Colombia is plagued by numerous minor setbacks including high unemployment and a broken pension system.
Camdyn Brocail - Period 4
Currency: Kazakhstani tenge
Country: Kazakhstan
Price of Big Mac: 1470.70
Exchange rate:$1=307.06
Big Mac exchange: 8/1.08= $7.41
Overvalued/undervalued= undervalued
Currency: Namibian dollar
Country: Namibia
Price of Big Mac:69.72
Exchange rate:$1= 14.56
Big Mac exchange: 2.83/24.92
Overvalued/undervalued= undervalued
Nabeel momin 4th
Serbia
Price of Big mac- 200 RSD Exchange Rate- 1$ = 67RSD
Big mac exchange- 200/69= 2.89
Undervalued
The Gibraltar Pound is appreciating because it has a higher standard of living.
The Tunisian Dinar is depreciating because their period of stability is ending and they are showing momentum for reform.
Singapore
Price of 2 piece meal- S$8.40; exchange rate- $1.41
2-piece meal exhange- 8.40/1.14 = $7.37
overpriced
Malaysia
Price of 2 piece meal- 11.90 ringgets; exchange rate- $4.28
2-piece meal 11.90/4.28 = $2.78
undervalued
Purchase Power Parity exchange rate is the rate at which the currency of one country would have to be converted into that of another country
Suriname-
Price of KFC is 19.95 SRD
1 dollars = 4.00 SRD
Undervalued
Exchange Rate= 19.95/4.00 = 4.98
NEPAL
Price of KFC - 89.91 RS
Exchange rate - 1 dollar = 106.77 RS
Big Mac exchange - 5.99/106.77 = $0.056
extremely undervalued
The Nepalese Rupee is depreciating because of the recent earthquakes causing massive instability in their economy.
Amanda Hong
Period 6
Country: Pakistan
Price of 2 piece value meal: 300 RS
Exchange rate: $1 = 104.88 RS
2 piece value meal/exchange: $2.86
Over valued/undervalued: undervalued
Hannah Kaplan
6th period
Ukraine
Price of two piece meal- 35,00 грн.
Exchange rate: $1= 0.043 US Dollar
Two Piece meal/exchange: 813.95
Overvalued
Colombia
Price of 2 piece meal:10800 pesos
Exchange rate: $1= .00030
Two Piece meal/exchange: 36,000,000
Overvalued
Carly Freker-6th
Jamaica
Price of two piece KFC meal- $654.76
exchange rate- $1.00=120.14 Jamiacan Dollar
654.76/120.14= 5.45
undervalued
Ghana
Price of two piece KFC meal- $19.175
1 US Dollar = 3.83500 Ghanaian New Cedi
19.175/3.835=5
undervalued
Jillian Sara Gicana
6th period
Purchasing Power Parity: An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power
Korea
Price of two piece meal : 5.99 USD
5900 WON
Exchange rate : $1 = 135 WON
KFC two piece exchange : 43.70
overvalued
Veronica Wang
Purchasing Power Parity:Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Country: Bolivia
Price of 2 piece meal: 190 Bolivian boliviano
Exchange rate: $1 = 6.91 Bolivian boliviano
2 piece/exchange: 190/.691 = 27.49
Over/undervalued: overvalued
Country: New Zealand
Price of 2 piece meal: 6 New Zealand Dollars
Exchange rate: $1 = 1.50 New Zealand Dollars
2 piece/exchange rate: 6/1.5 = $3.99
Over/undervalued: undervalued
Bolivia currency is very weak against the US Dollar which is why a mere $5.99 translates to $27.49 bolivianos. However New Zealand may undervalue the meal as America is not a major trading partner.
Purchasing Power Parity: An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
United Kingdom: 3.99 pounds/2 piece value meal; 1 pound=$1.50; 3.99 pounds=$6.00 (overvalued before tax) because the pound is stronger than the American dollar and the price of importing/ raising chicken is more expensive in the UK than in the US.
South Africa: 27.90 South African Rand/2 piece value meal; 1 Rand=$0.069; 27.90 Rand=$1.92 (undervalued) The weakness of the rand leads to very low prices for meals.
Bangladesh
Price of a two piece KFC meal in U.S - $5.99
exchange rate - $1 - 78 taka
price of a two piece KFC mean in Bangladesh 250 Tk
250Tk/78Tk = $3.20
In other words, Bangladesh's two piece chicken is half of what it costs in america.
undervalued
Alexis Zamora
6th
Singapore-$8.40
$1 = 1.41 Singapore Dollar
KFC exchange 8.40/1.41=5.95
Netherlands 5.95
$1=1.78525 euro
KFC exchange 5.95/3.33 euro
Purchasing Power Parity: estimates the amount of adjustment needed on the exchange rate between countries and lets exchange to be equivalent to each currency's purchasing power.
The Sing Dollar is appreciating because it is an island country, and therefore has to import lots of its natural resources.
Malaysian Ringgits are depreciating because of the decreased value of oil, one of their major exports. China also devalued their money, causing other Asian currencies, including Malaysia to suffer.
Jillian Sara Gicana
Thailand
Prices of two piece meal : 5.99 USD 32.00 THB
Exchange rate : $1 = 35.65
KFC two piece exchange : 213.59
overvalued
Demarcus Davis
6th Period
Jordan
Price of 2 piece meal:21 AED
exchange rate:.71
2 piece meal exchange:29.58
overvalued
St. Kitts
Price of 2 piece meal: $18.98
exchange rate: 2.70
2 piece meal exchange: 7.03
overvalued
Honduras
Price of a two piece KFC meal in U.S - $5.99
exchange rate- $1 = 22.24 Honduran Lempira
price of a two piece KFC mean in Honduras - 129 Lempira
129/22.24 Lempira = $5.8
undervalued
Jillian Sara Gicana
The korean won is appreciating due to having slow exports.
Thailand thb is appreciating due to weak tourism, disinflation, and stumbling exports.
Amanda Hong
Period 6
Country: Colombia
Price of 2 piece value meal: 17,500 Colombian Peso
Exchange rate: $1 = 3307.12 Colombian Peso
2 piece value mean/exchange: $5.29
Over valued/undervalued: undervalued
Purchasing Power Parity is an economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Mongolian Tugrik:
Price of 2-Piece:6,000₮
Exchange rate: $1=1993.98₮
2-Piece Exchange: 6,000/1993.98 = 3.01 (undervalued)
Sri Lankan Rupee:
Price of 2-Piece: Rs 480
Exchange Rate:$1=143.18
2-Piece Exchange: 143.18/480 = .298 (undervalued)
Shreya Narayan
Period 6
Purchasing Power Parity- An economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
South Africa
Currency- Rand
KFC 2 piece value meal- $27.90
Exchange Rate- $1 USD= 14.55 Rand
Exchange- 27.90/14.55= 1.92 rand
undervalued
South Africa is a country that is struggling to solve its own internal problems which is contributing to further rand weakness
Alexis Zamora
Morocco-12 AED
$1=3.67 AED
KFC exchange rate 12/3.37=$3.56
undervalued
in regards to my previous post Netherland is undervalued
Thanh Vo
period 6
Purchasing power parity- the idea that prices should be the same even with different translations of currencies in different countries
1) Country: Vietnam
Price of 2 pc value meal: 79,000 vnđ
Exchange Rate:$1 = 22,471.91 vnđ
2 pc meal/Exchange: 79,000/22,471.91= 3.52
Over/Undervalued: undervalued- inefficient trade and economic conditions
2) Country:Qatar
Price of 2 pc value meal: 17 QAR
Exchange Rate: 1 USD = 3.64 QAR
2 pc meal/Exchange: 17/3.64 = 4.67
Over/Undervalued: undervalued- needs a more diverse economy to add more value to currency
Countries name is Brazil
Price of KFC is 20.01 BRL
1 dollars = 3.77 BRL
Undervalued
Exchange Rate= 20.01/3.77 = 5.3
SECOND COUNTRY
ZAMBIA
United state - 5.99
Exchange rate - $1 - 10,724.88 Kwacha
Price of KFC - 36,722 ZK
36,722 ZK/10,724.88 = $3.42
Undervalued
The reason is because of Zambias extreme governmental corruption preventing it from effectively participating in the global economy and developing.
Shanika Jacob-6th period
Purchasing Power of Parity is an economic theory which calculates the amount that needs to be adjusted for the exchange between countries in order for the currency to be equivalent which each other ( exchange rate)
Dominican Republic $230 RD
Exchange rate: $1 : $16.93 peso
KFC/ Exchange: 230/16.93=$13.59
Overvalued
Costa Rica $42 CRD
Exchange rate: $1: 523.18
KFC/ Exchange: $42/$523.18=$.08
Undervalued
Matheus Menezes
6th period
Purchasing Power Parity: The expenditure on a singular commodity must be the same in both currencies when accounted for exchange rate.
Price of 2 piece value meal in Brazil: R$13.00 Exchange rate: $1:R$3.76 Price/exchange: 13/3.76 = 3.46 Undervalued. It is undervalued due to corruption in government which caused currency value to drop compared to the dollar.
Price of 2 piece value meal in Saudi Arabia: 19 AED Exchange rate: $1: 3.67 AED
Price/exchange: 19/3.67 = 5.18 Undervalued. It is undervalued because of the recent removal of oil quotas which prompted the drop of value in the middle eastern countries.
Joyce Varughese
period 6
Purchase Powe Parity is the comparison of purchasing power of currency with exchange rates.
Egypt
Price of 2 piece meal- 13 AED
exchange rate- 1 US Dollar = 7.82 Egyptian Pound
19 AED/7.82= $2.43 (2 chicken and rice meal)
Undervalued
Japan
Price of 2 piece meal- 1090 Yen
1 US Dollar = 123.32 Japanese Yen
1090/123.32= $8.84
Overvalued
Egypts currency depriciating because of its conflict with the eurozone market.
Japans currency is depreciating due to conflicts in trade.
Shreya Narayan
period 6
Japan
Currency- Yen
KFC 2 piece value meal- 680 Yen
Exchange Rate- $1 USD= 123.31 Yen
Exchange- 680/123.31= 5.51 Yen
overvalued
Maria Francis
Period 6
Purchasing Parity is an economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power.
Canada- $4.44
exchange rate- $1 = 1.35 Canadian dollars
2 piece/exchange rate- $3.29
undervalued
Kuwait- 0.900 KD
exchange rate- $1 = 0.30 Kuwait Dollar
2 piece/exchange rate- 3
undervalued
Madison Bettis
6th period
Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Price of KFC 2 piece value meal: 5.99 USD
Turkey
Price of KFC: 14.00 Lira
Exchange rate: $1 = 2.91 Lira
KFC Exchange: 14/2.91 = $4.81
Undervalued
Bermuda
Price of KFC: 8.95 Bermudan dollar
Exchange rate: $1 = 1 Bermudan dollar
KFC exchange: 8.95/1 = $8.95
Overvalued
Due to inflation in both countries along with the difference in trading prices.
Purchasing power parity : is a theory that states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
NIGERIA
Price of KFC: 1,000 Niara
Exchange Rate: $1 = 199.05 Niara
KFC exchange : 1,000/199.05 = $5.02
- Undervalued
EGYPT
Price of KFC: 18.64 Egyptian Pounds
Exchange Rate: $1 = 7.83 Egyptian Pounds
KFC exchange: 18.64/7.83 = $2.38
- Very Undervalued
Andrew Olson
6th Period
Ireland
Price of Meal- 2.99 Euros
Exchange Rate- $1 = .92 Euros
Meal Exchange= $3.24
Undervalued
Chile
Price of Meal- 2111 Pesos
Exchange Rate- $1= 706 Pesos
Meal Exchange= $2.99
Undervalued
The Czech Republic's Koruna is growing weaker due to surrounding countries' deflation.
The Pakistani Rupee is falling along with oil prices.
Amira Nickerson
Period 2
Katy Kaiser
Period 6
Purchasing Power Parity is the exchange rate that it takes to change from one currency of one country to another for the same amount of goods and services in both countries.
Iraq
1107.10 Iraqi dinar = 1 US dollar
Two piece meal costs in Iraqi dinar: 6000/1107.10= 5.42 US dollars
Undervalued
Ecuador
Ecuador uses US dollar
Two piece meal costs 4.40 US dollars
Undervalued
Karen Kurian
Period 6
Purchasing Power Parity: a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Country: Taiwan
Price of 2 piece meal: 145 NTD
Exchange rate: $1 = 32.92 NTD
2 piece/exchange: 145/32.92 = $4.40
Over/undervalued: undervalued
Taiwan's economy is driven by exports, so the NTD is low in order to keep prices competitive relative to other countries.
Country: South Korea
Price of 2 piece meal: 5,900 won
Exchange rate: $1 = 1177.25 won
2 piece/exchange rate: 6/1.5 = $5.01
Over/undervalued: undervalued
The won is weaker compared to the US dollars as a weaker currency usually means bigger sales of their products overseas and more jobs at home similar to the NTD.
Trinidad & Tobago
Meal Price- $28
Exchange Rate- $1= $2.38
2 piece/exchange rate- $28/$2.38= $11.76
undervalued
Sri Lanka
Meal Price- $450
Exchange Rate- $1=$143.26
2 Piece/exchange rate- $450/$143.26= $3.14
undervalued
Charith Wijeyesekera
Period 6
Purchasing power parity is the idea that the an amount of currency needed to buy the identical good or service on any country should be the same.
India
Meal Price- 135 Rupees
Exchange Rate- 1US = 66.86 Rupees
2 Piece/exchange rate- 135/66.86 = $2.02
undervalued
The exchange rate has been increasing over the past years (more Rupees per dollar) and this leads to a depreciation of the rupee. This could be because of the rising strength of the dollar and the instability of the market in India.
UAE
Meal Price- 13 AED
Exchange Rate- 1US = 3.67 AED
2 Piece/exchange rate- 13/3.67 = $3.5
undervalued
The exchange rate between the AED and the dollar has stayed constant over the past years. This is most likely because of the UAE market not being weak and/or volatile
PPP is an exchange ratio between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Country: South Africa
Price of kfc: 29.90 zar
Exchange: $1=14.60 zar
Kfc/exchange = $6.56
Undervalued
Country: New Zealand
Price: $9.90
Exchange: $1=$1.51
Kfc/exchange= $6.56
Undervalued
Purchasing power parity is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries.
Country: Moldova
Meal Price: 8.50 Leu
Exchange: $1= 4.08 romanian leu
2 piece/exchange rate: 2.083
Undervalued
Country: Slovakia
Meal Price: 2.80 slovak koruna
Exchange: $1= 22.24 slovak koruna
2 piece/exchange rate: o.1258
Undervalued
David Edquilang
Period 6
Purchasing Power Parity is the idea that a unit of currency should be able to buy the same quantity of goods and services in any country.
Country: Peru
Price of Meal: 14.90 PEN
Exchange Rate: $1 = 3.37200 PEN
Meal/Exchange: 14.90/3.37200 = $4.42
Undervalued.
Country: Hong Kong
Price of Meal: 48.00 HKD
Exchange Rate: $1 = 7.75009 HKD
Meal/Exchange: 48.00/7.75009 = $6.19
Overvalued.
Jeremy Tanueco
Period 2
The reason the Filipino peso, as well as other Asian currencies, is depreciating against the U.S. Dollar is that many investors recently believe that economic growth is returning back to the U.S., pulling their money out of Asia, weakening various Asian economies, including the Philippines.
The Costa Rica colon's depreciation against the US dollar is that the Costa Rican government used to sell large sums of dollars in the market in order to meet the government's own currency exchange needs, but since the vice president of Costa Rica, Luis Liberman, says they will not make any large foreign exhchanges for the remainder of the current goverment, the USD will likely continue to rise while the colon keeps declining.
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