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| Topic: |
Business
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| Number of pages / Number of words: |
6 / 1496 |
Essay's paper body
For purposes of international comparisons indices of relative national price levels that use absolute price comparisons have some advantages. Nevertheless, the theory provides a useful benchmark for policies.
Possibly the most well known example of Purchasing Power Parity was given by The Economist Magazine as The Big Mac Index since 1986...
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Using the Big Mac index, we determine the cost of a Big Mac in a number of countries and are able to conclude an exchange rate based on this index. For instance, if a Big Mac costs $3.41 in the US, and 23.32 Yuan in China, we can determine that the exchange rate is $1 for 6.8398 Yuan. One of the primary uses of Purchasing Power Parity is in lessening the misleading effects of shifts in a national currency...
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Critically Evaluate The Use Of The Big Mac, By The Economist, As A Measure Of Purchasing Power Parity. Could You Suggest A Similar Alternative That Might Be A Good Measure Of Ppp
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