The "Big Mac Theory of Exchange Rates" Tests the Accuracy

question 157

Essay

The "Big Mac Theory of Exchange Rates" tests the accuracy of purchasing power parity theory.In January 2017,The Economist reported that the average price of a Big Mac in the United States was $4.93.In Switzerland,the average price of a Big Mac at that time was 6.50 Swiss francs.If the exchange rate between the dollar and the Swiss franc was 0.93 Swiss francs per dollar,explain how it would be profitable to buy Big Macs in the United States instead of in Switzerland.

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Definitions:

Tissue Repair

The biological process by which cells regenerate to mend damaged or lost tissue, restoring its function.

Granulation Tissue

New vascular tissue formed on the surface of a wound during the healing process, characterized by small, red, granular bumps.

Fibroblasts Migration

The movement of fibroblasts, a type of cell that synthesizes the extracellular matrix and collagen, towards the site of tissue injury for healing.

Inflammatory Response

The body's defense mechanism against infection or injury, resulting in redness, heat, swelling, and pain.