Share
Explore BrainMass

International Business and Big Mac Index

1.) Based on financial forces affecting international business, comment on the accusations made against China indicating that the Chinese government was manipulating the value of the Yuan against other currencies. Using the U.S. as an example, how are we affected if these accusations are true.

2.) Explain the principles on which the Big Mac Index is built and how it might help you as an international manager.

Please provide references.

Solution Preview

ANSWERS

Question 1
Since China became one of the biggest and most active players in global trade, the "valuation of the Chinese renminbi (RMB) has drawn lots of attention lately and a great deal of pressure on the part of developed nations for revaluation" (Chu, 2005, p. 7). One of these developed nations is the United States. If it is really true that the Chinese government is manipulating the value of the Yuan or renminbi against other currencies, and then the exchange rates of the US dollar and the Yuan would be affected, ...

Solution Summary

This solution of 364 discusses how the Chinese government was manipulating the value of the Yuan and the characteristics of the Big Mac Index. Reference used is included.

$2.19