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Bic Mac Index

Research your currency and it's valuation per the Big Mac Index for Japan. So, give a one to two sentence explanation of what the Big Mac Index is then explain if your currency is undervalued or overvalued and by how much. Then, share at least one interesting random fact about life in the country you were assigned - whatever you found with the research you read through to get to your currency information. Finally, conclude with your thoughts.

Solution Preview

The Big Mac Index is based upon the theory of purchasing power parity, illustrating in a simple fashion, the exchange rate for an item (the Big Mac) sold around the world. The concept states a dollar should buy the same amount in all countries. Over time, the exchange rate between two countries will move towards a rate that equalizes the prices of a Big Mac (or basket of goods and services in each country). The index serves to indicate if the currency is under- or overvalued.

In the case of Japan, the price of a Big Mac in the United States is $4.20, ...

Solution Summary

This detailed solution researches the Japanese yen per the Big Mac index, as well as explaining The Economist's Big Mac Index. It discusses if currency is over or undervalued and by how much. APA references are included.