Question

Why would a "Big Mac" be used to compare the strength and weaknesses of currencies around...

Why would a "Big Mac" be used to compare the strength and weaknesses of currencies around the world? What other good could be used instead of a Big Mac? Why?

Homework Answers

Answer #1

Ans. To compare the currencies around the world, a good is required having similar specefications across the countries so that its price can be compared in different counties which will indicate the relative strength or weakness of various currencies. Big Mac is used as this good as it is available in many countries around the world and with similar specefications. Also, McDonalds is known for its negotiating power with its suppliers, assuring that the real price of this burger will be same in most of the countries.

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