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arman mahrough
on Nov 12, 2024

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The purchasing power parity (PPP)theory suggests the prices of identical items will equalize internationally.An illustration that supports this theory is the fact that the price of a McDonald's "Big Mac" is the same around the world.

Purchasing Power Parity

A theory that states prices of goods and services should equalize across countries when expressed in a common currency, meaning a basket of goods should cost the same regardless of the country after accounting for exchange rates.

Big Mac

a hamburger sold by the international fast-food chain McDonald's, often used as a symbol of globalization and sometimes as a reference point in economic studies like the Big Mac Index.

  • Understand the concepts that account for fluctuations in foreign exchange rates, such as the theory of purchasing power parity.
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Meghan NaderNov 17, 2024
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