Key Concepts: Prices
and Exchange Rates, Interest Rates and Exchange Rates, Policy Effects, International
Policy Coordination
Economist.com—Big Mac Index
Click on "Big Mac Currencies—April
19th 2001."
- Assess whether the Purchase
Power Parity (PPP) assumption holds in the real world in respect to Big Mac
prices around the world.
- According to the current
Big Mac Index, what currencies are significantly "undervalued" with
respect to the U.S. Dollar? How would this influence the ability of those
countries to export goods to the U.S.?
- Other than PPP, what
other factors may influence the exchange rates?
