The Big Mac Index

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Title: The Big Mac Index

Essay Details:

Subject: Business

Author: Joanne S

Date: January 13, 2012

Level: College

Grade: A

Length: 1 / 145

Essay text:

The Big Mac Index is basically based on the purchasing power parity theory. This seems like a complicated theory of exchange rates, and price levels, but in all actuality it is very simple. Purchasing power parity is an economic technique used when attempting to determine the relative values of two currencies. It is useful because often the amount of goods a currency can purchase within two nations varies drastically; based on availability of goods, demand for the goods, and a number of other difficult to determine factors. Purchasing power parity solves this problem by taking some international measure (the McDonald’s Big Mac) and determining the cost for that measure in each of the two currencies, then comparing that amount...

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