The News-Magazine the Economist Regularly Publishes Data on the So $4 ^ { \text {th } }$

question 11

Essay

The news-magazine The Economist regularly publishes data on the so called Big Mac
index and exchange rates between countries.The data for 30 countries from the April 29,
2000 issue is listed below: The concept of purchasing power parity or PPP ("the idea that similar foreign and domestic goods ... should have the same price in terms of the same currency," Abel, A. and B. Bernanke, Macroeconomics, $4 ^ { \text {th } }$ edition, Boston: Addison Wesley, 476) suggests that the ratio of the Big Mac priced in the local currency to the U.S. dollar price should equal the exchange rate between the two countries. a)Enter the data into your regression analysis program (EViews, Stata, Excel, SAS, etc.).
Calculate the predicted exchange rate per U.S.dollar by dividing the price of a Big Mac
in local currency by the U.S.price of a Big Mac ($2.51).

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Definitions:

Enforceable

Capable of being imposed or upheld by legal process or action.

Lifetime Employment

A job guarantee in which an employee can expect to remain employed in their position for their entire working life.

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An agreement between parties that is spoken and not written, yet is legally binding unless specifically required by law to be written.

Enforceable

Capable of being executed or imposed in accordance with legal or contractual requirements.