The Big Mac Index shows that the price of Big Mac in China converted from the local currency, yuan, to be $2.18, whereas its price in the United States is $3.73.This shows that:
A)the Big Mac is more popular in China than in the United States.
B)the Big Mac is less expensive in the United States than in China.
C)the Chinese yuan is overvalued when compared to US $.
D)the Chinese yuan is undervalued against the US $.
E)beef is less expensive in China than in the United States.

Question

Quizplus · Accepted Answer

The Big Mac Index compares the price of a Big Mac in different countries to assess the relative value of currencies. The fact that the price of a Big Mac is lower in China when converted to US dollars suggests that the Chinese yuan is undervalued against the US dollar.

The Big Mac Index Shows That the Price of Big