The Big Mac index illustrates that in lower-income nations:
A) Big Mac prices, converted to a common currency, were cheaper.
B) PPP cannot be computed in this manner because diets in lower-income nations do not include fast food.
C) Big Mac prices, converted to a common currency, were more expensive.
D) lower-income workers could not afford to purchase fast food.

Question

Quizplus · Accepted Answer

The Big Mac index illustrates that in lower-income nations, Big Mac prices, when converted to a common currency, are cheaper. This suggests that PPP is not holding in these countries and exchange rates do not accurately reflect the relative prices of goods.

The Big Mac Index Illustrates That in Lower-Income Nations