The Big Mac Index demonstrates the concept of Purchasing Power Parity.If the current price of a Big Mac hamburger in the United States is $3.80,and the current price of the same burger in Germany is €2.75,what is the implied exchange rate of dollars per euro?

Question

Quizplus · Accepted Answer

To apply the concept of Purchasing Power Parity, we need to divide the price of a Big Mac in the US ($3.80) by the price of a Big Mac in Germany (€2.75).

$3.80/€2.75 = $1.3818/€

Therefore, the implied exchange rate of dollars per euro is $1.3818/€. The answer is B.

The Big Mac Index Demonstrates the Concept of Purchasing Power