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Review the Big Mac Index, the most recent Big Mac Index can be found at the following web address: http://www.economist.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?

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