If a Big Mac costs $3 in the United States and 2 pesos in Mexico, what is the implied purchasing power parity (PPP) exchange rate between the peso and the US dollar?

Explanation

The PPP exchange rate is calculated by dividing the price in pesos by the price in dollars: 2 pesos ÷ 3 dollars = 0.67 pesos per dollar. This means 1 US dollar should be equivalent to 0.67 pesos based on Big Mac prices.