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Lecture Notes - Big Mac Index

Lecture Notes - Big Mac Index

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Published by Katherine Sauer

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Categories:Types, School Work
Published by: Katherine Sauer on Jun 26, 2012
Copyright:Attribution Non-commercial


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Dr. Sauer 
The Big Mac Index
Fun with Exchange Rates:
The Economist’s
Big Mac IndexThe index is a lighthearted attempt to gauge how far currencies are from their ________________ value.It is based on the theory of purchasing power parity (PPP).-says that in the _______________ exchange rates should move to equalize the price of anidentical basket of goods between two countriesOur basket consists of a single item, a Big Mac hamburger, produced in nearly 120 countries.The fair-value benchmark is the exchange rate that leaves burgers costing the _____________________as elsewhere.

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