1 page/≈275 words
Business & Marketing
BIG MAC INDEX (Essay Sample)
Review the Big Mac Index, Table 10.2, in your course book. The most recent Big Mac Index can be found at the following web address: http://www(dot)economist(dot)com/markets/bigmac/index.cfm. Incorporate answers to the following questions in a well-crafted essay response including supporting evidence for your discussion. Remember to cite any sources used, including the textbook (APA format is required). Briefly discuss the history and purpose of the Big Mac Index. Where is it most expensive to buy a Big Mac? Where is it the least expensive to buy a Big Mac? What factors other than currency overvaluation and undervaluation might contribute to these differences? Based on the theory of purchasing power parity, what is likely to happen to these currencies against the dollar in the next few years? Answer source..
Big Mac index Name: Institution: Big Mac index generally refers to an informal way of measuring the purchasing power parity usually between two currencies; for instance the US and Canadian currency. It is important because it shows how market exchange rate can swerve from their true values. This index is based on a theory of purchasing power parity. Under this theory, the exchange rate among countries should be altered by the prices of an identical commodity or service that exist among the nations. Thus, it is based on the view that a dollar should buy the same amount among all the nations. This theory was established and printed by the Economist in the year 1986; the article had a lot of impact thus made the magazine to continue its publication until today (Carbaugh, 2011). The recent released Big Mac Index result shows that the most exp...
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