According to the Big-Mac Index produced by The Economist (https://www.economist.com/big- mac-index), the Swiss Franc and

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According To The Big Mac Index Produced By The Economist Https Www Economist Com Big Mac Index The Swiss Franc And 1 (415.08 KiB) Viewed 48 times

According to the Big-Mac Index produced by The Economist (https://www.economist.com/big- mac-index), the Swiss Franc and the Norwegian Krone are the two most overvalued currencies against the US dollar in December 2021, and the Russian Rouble and Turkish Lira are the two most undervalued currencies. How could you use this information, together with the assumption that the law of one price holds for the Big Mac in the medium term (and that nominal prices in their local currency are sticky), to forecast whether each currency will appreciate of depreciate against the US dollar in the medium term? Suppose that rather than assuming the law of one price (which is a very strong assumption), you are willing to assume in each country that relative PPP holds for the Big Mac on average over long periods of time. How would you use the above information and historic Big Mac prices and exchange rates to forecast whether each currency will appreciate or depreciate against the US dollar in the medium term? Your answers can be qualitative, and not quantitative.