Using data from The Economist\'s Big Mac Index for 2016, the following table sho

Question

Using data from The Economist's Big Mac Index for 2016, the following table shows the local currency price of a Big Mac in several countries as well as the actual exchange rate between each country and the United States. At the time of the data collection, a Big Mac would have cost you $4.93 in the United States and GBP 2.89 in the United Kingdom. The actual exchange rate between the British pound and the U.S. dollar was $1.63 per pound. The dollar price of a Big Mac purchased in the United Kingdom was, therefore, computed as follows: $1.63 Dollar price of a Big Mac in the United Kingdom GBP 2.89x11 11 $4.71 For the price you paid for a Big Mac in the United States, you could have purchased a Big Mac in the United Kingdom and had some change left over for fries!

Explanation / Answer

If big mac were a durable good that could be costlessly transported between countries .It would have to present an arbitrage oppertunity.

The correct option is :

Exporting Big mac from Eurozone to United States.

Related Questions

Navigate

• Browse (All)
• Browse U
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.