One Friday a Few Years Ago, the Big Mac Index

question 22

Multiple Choice

One Friday a few years ago, the Big Mac Index suggested that the yen was overvalued relative to the dollar by 70%. When currency markets opened on the following Monday, anyone using the Big Mac Index would conclude that the yen was only 20% overvalued relative to the dollar. What is the most likely explanation for this?

• A)Japan's Central Bank acted to prop up the yen.
• B)Inflation in Japan suddenly spiked upward.
• C)McDonald's headquarters stopped hedging.
• D)McDonald's Japan reduced the yen price of a Big Mac.
• E)McDonald's Japan increased the yen price of a Big Mac.

---

Definitions:

Aromatic

Relates to organic compounds that contain one or more benzene rings or similar ring structures, characterized by a distinct smell and stability.

Fragrant

Fragrant refers to having a pleasant or sweet smell, commonly associated with flowers, plants, and certain chemical compounds.

Cyclohexane

A saturated hydrocarbon with the chemical formula C6H12, commonly used as a solvent or in the manufacture of other chemicals.

Methylcyclohexane

A saturated hydrocarbon with the formula C7H14, characterized by a methyl group attached to a cyclohexane ring, used as a solvent and in organic synthesis.