A professor once suggested the Big Mac index was a useful way to calculate the purchasing price
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Question:
- A professor once suggested the "Big Mac" index was a useful way to calculate the purchasing price parity of currencies around the world.He noticed the following:
- Cost of a Big Mac Hamburger (BMH)in New York City BMH:USD = 5.00
- Cost of a Big Mac Hamburger in Beijing BMH:CNY = 18.00
- Cost of a Starbucks Coffee (SBC) in New York SBC:USD = 3.50
- Cost of a Starbucks Coffee in Beijing SBC:CNY= 35.00
- a) Calculate the implied USD:CNY exchange rate based on a Big Mac
- 90
- 3.6
- Cannot be computed from the information given
Related Book For
International Business
ISBN: 978-1259317224
1st edition
Authors: Michael Geringer, Jeanne M. McNett, Michael S Minor, Donald A Ball
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